On small planes like a Cessna 172 or a Cherokee 140, the prop is a type known as "fixed pitch", that is, the angle of attack for each of the blades is fixed, or immovable. There are two extremes for prop blade pitch: climb or cruise. A climb prop allows you good takeoff performance, but slower cruise speed, and as you might expect, a cruise prop,  provides good cruise, but in turn, spells less takeoff performance. Some smart guy, many years ago, figured out that it would be nice to have the best of both worlds, and that is how the "constant speed" or dynamically adjustable propeller came into being. So, what does this mean for you? As far as proper operation, takeoff is accomplished with the prop control forward. This puts the props in the high RPM or "fine" pitch position(as my friends in Europe like to say). Immediately after takeoff, and at a safe altitude, the RPM should be reduced to a "climb setting", but not before the manifold pressure.  More than anything else this saves wear and tear on the engines. I fly a Cheiftain in real life, on occasion, and I reduce the power around 100feet(I leave the prop full fwd all the time on the sim!/ those engines are pretty tough!  )   Once cruise altitude is reached, the RPM is reduced even further, to a more "course" setting. On the sim, the dynamics are not very accurate, so the fact that you didn't really notice a change with RPM setting, has more to do with inadequate programming at M$ !   
One thing you WILL notice is a reduction in fuel flow.