How exactly does the referral system work? More specifically, how many people do you have to refer to get points to rank up?

Referrals need to be active in order to earn you points. They have to fight in so many battles, breed 20 pets, and earn scales. You can see what your referrals have done (and the points you've accumulated) on the Account - Settings page.

The requirements are listed in a page in the announcements somewhere, but it's a little hard to dig up.
(this really should be put on the referral page!)

Yes... This information really should be posted somewhere, with the actual required numbers.

It would be nice if this information was readily available.. it took me months to figure it out. When I first started I managed to invite about a dozen people but most of them didn't continue playing. I mean.. it makes sense for the site because you don't want a bunch of people to sign up when they have no intention of actually playing.

I managed to force my bf to do the "breed 20 sylestis" for me, and I hovered over his shoulder getting the 1,500 scales. He is rather miffed now. Something about "forcing me to grind for stuff". Ah well. He'll get over it.
If I had known beforehand that I wouldn't get anything for just having him sign up, I wouldn't have bothered him in the first place.

At any rate, I have a related question for the referrals.
What exactly does "Bred Egglings Begin at an Additional 2 Incubation per Rank" mean?
I'm going to guess that it's like having two free nurtures for your egg when you breed it, but I'm not sure and I would like to know before I spend my precious points (that I will probably not get anymore of xP).

You know the bar on an egglings page which goes up to 72? If left unnurtured, that is how long it would take to hatch. I think that means for every point you add to that, bred egglings will start at an extra 2 points on that scale

Hmm... but will that include 2 bonus points to stats? To be honest I usually don't mind how long it will take my eggs to hatch, I just wish I could get them more nurtures so they will have better stats with they hatch.

Sorry, I don't know about stats

nurturing egglings does not affect their stats, Nurtures just decrease the time it takes for the egg to hatch.

To increase stats, you need to nurture hatchlings. So after they hatch, the nurtures won't decrease the time it takes for them to grow up, but increase their stats. (which is why you work out with them when they're weak and etc - to increase that particular stat that they are weak in).

nurturing egglings DOES increase their stats, you just can't see it happen like you can with hatchlings.

But I don't believe the bonus two hours affects anything except hatching time.