This first post will mostly be limited to articulating a basic mechanistic model, but will include an outline of how memory and functions match very well with basic empirical facts in neuroscience. The advantage to this model is to demonstrate how these functions can arise spontaneously, without the need for predefined structure. I'll end with only a hint about how consciousness can be embedded in this network, to be followed up in subsequent post to receive proper treatment. Qualia, instinct, intelligence, and consciousness must be defined in a consistent and hierarchical manner to be meaningful. This is a toy model using nothing more than a plane of metronomes and springs to illustrate a model of brain function. It's purpose is to intuitively illustrate Hebbian learning in a purely mechanistic 'self organizing' model.
Consider two out of phase metronomes, swinging at different rates. If you place these two metronomes on a single movable plate they will spontaneously sync up. This effect has caused more than one suspended bridge to collapse. Here (video link) is a Ted Talk video by Steven Strogatz on spontaneous synchronization. At 11:40 he demonstrates the spontaneous synchronization of metronomes I'll be using as the basis of this toy model of brain function. However, instead of a movable platform, this model will use springs connecting the base of the metronomes with their neighbors. So how does this become a brain that's provides an understanding of the world? To illustrate let's make a very basic list of empirical data to explain:
 Memory is not stored in particular brain locations.
 Electrical stimulation of individual neurons can produce memories, actions, etc., as if that was the brain location of the memory, skill, etc.
 Recalling a memory increases the rate the memory degrades.
 Recalling or observing something activates related information not previously related through any observation (inventiveness).
 Memory consolidation, such that memories get overlayed and entangled with other memories, thus prone to false memories.
These springs have a very simple rule. When the springs stretch between out of phase metronomes their tensions reduces, like fatigued metal. When two metronomes are in phase such that the spring connection don't stretch the spring tension increases. The metronomes haves two states, exited and ground state, which are represented by two different periodicities. Two metronomes simultaneously in the excited state are in phase. Now each neural input, neurons in out eyes excited by photons, on our skin by touch, etc., have connections to neurons in our brain, metronomes in the analogy.
Now what happens when you increase the periodicity of a certain set of metronomes (neurons) but not others? The spring tension (connection) between the excited metronomes increase, and loosens between those metronomes that are not excited at the same time. Thus with this spring tension adjusted this way (by an experience/sensory input), all it takes to remember that experience is to excite one of the metronomes that was part of the excited group when the experience took place. The spring tension automatically syncs up and excites the entire group of metronomes corresponding to that experience, but not the others. For the same reason suspended bridges can collapse through resonants and metronomes on a movable base sync up.
 Explained by a distribution of spring tensions.
 Explained by the self syncing of the metronomes in accordance with their connectivity.
 By the same mechanism that created the memory. When you remember in absentia of the stimulus that produces it, the spring tension between the greater and lesser excited states begins to loosen, by the same rule that loosened connectivity between metronomes of different states to allow the memory to form in the first place.
 When two experiences excite a subset of the metronomes from previous experiences, one experience can induce a memory of another. Wow, that butterfly is flapping its wings like that bird I seen the other day. This overlap recognition is our intelligence (though not necessarily consciousness).
 By , as the memory degrades with recollection, the act of remembering then becomes a memory in itself that can supersede the original. By , this memory of remembering then contains related information which can be mistaken as part of the original memory. Thus false memories are born.
This in general explains a lot about brain function and why it is so plastic, as memories are imprinted via the distribution of excited metronomes, irrespective of any particular initial distribution or structure in the metronomes connectivity. It falls short at this point on what consciousness is. To fully remedy that takes a more complete description of consciousness, instinct, qualia, etc., that I will follow up with in subsequent post. For now I will provide a simplified construct of what consciousness is.
In the above toy model we have metronomes that correspond to sensory input and some that correspond to motor output. As is it can be trained to output motor functions in response to very generalized sensory inputs. For consciousness we need a third set of sensory input metronomes, but instead of input coming from external stimuli the inputs come from the patterns of metronomes excitations that do have inputs from external sensory inputs. The same learning capacity of this third set thus creates what psychologist call "theory of mind". This third set can then recognize from experience (memory) the excitation overlap between present sensory input and prior memories as in . By looping through and activating various related memories, similar to the way an electric probe activates memories and actions, new knowledge can be acquired from thought alone through overlap recognition. This integration process of the various parts of self in the mind is what we call consciousness and provides what we perceive as our intelligence.
It gets even more interesting when it's taken in the context of evolution, and the roles of qualia and overcoming the limitations of instinct are taken into account. I didn't include the references I had in mind, but anybody who wishes to object or have any reservations about the functional validity of the stated mechanisms is welcome to ask for the evidence. Here are a few articles that may answer most such questions though:
(Link): Researchers discover how old memories are re-saved and changed
(Link): Brain quirk makes eyewitnesses less reliable
I follow up soon with a more detailed outline of various concepts.