"once I have put music onto itunes i delete it from my computer. Is this why?"
Quite possibly...
"iTunes doesn't copy your music, it just stores the location so it know where to find it."
It can work that way, but it doesn't have to....
Look at iTunes preferences, under the advance tab there should be an option that says "Copy files to iTunes Media folder when adding to library".
If that is not checked then it works as Trills describes, all iTunes does is to store the location of the original music file. So if you then delete that file iTunes can no longer play it.
However if that option is checked then when you add music to iTunes it also makes a new copy of the file for itself.
On a PC I think the default is that it's not selected, however on a Mac the default is that it is selected.
So have a look at that option, and if it is not selected then you cannot delete the music after adding it to iTunes. So either leave the music where it is or select that setting and then after adding music in future you can delete the original file.