I don’t trust their exercise calories - I found I got the best results by just sticking to the calorie goal regardless of exercise. If I was hungry on a day when I’d done a lot of exercise I’d allow myself an extra 200-300 calories for a snack.
You shouldn't be nettinh less than 1200 calories but most likely need more than that. If you look on the mfp general weight loss forum there is a sticky post explaining how to calculate the minimum calorie intake you need for your body to function.
Once you’ve entered your current weight and goal weight mfp sets a calorie target that is already 500 less than you require per day to remain the same weight (unless you’re relatively small in which case the minimum it will recommend is 1200 for anyone). So you are meant to eat those calories. Unless I’m really hungry I often don’t eat the ‘exercise’ calories though.
Problem with the calorie estimators is that they don't take into account how used to the exercise your body is. I run a lot, and various apps tell me I have burnt 1000+ calories on long (10 miles +) runs. If I ate that many extra calories, I would put on weight. It's a bit of an inexact science!
Unless you walked about 20,000 steps, I don't think you burned that many calories. I think a lot of people err on the side of caution and don't eat back the exercise calories. Might be worth upping your daily limit to e.g. 1600 if you are doing a lot of activity though.