It's a parliamentary system - technically a parliamentary monarchy, since the PM is the head of government, but the queen is the head of state.
We vote for a representative for our riding, who represent that riding as a member of parliament. The leader of the party with the most MPs becomes prime minister. Actually, technically the attorney general, who is the queen's representative in Canada, asks someone to become PM and form a government; needn't be the leader of the party, though practically it always is. So, if a coalition of minority parties forms and manages to get 50% of the house, the attorney general could ask the leader of one of those parties to form a government. Anyway...
From the point of view of who represents each individual riding in parliament, it's direct one-person-one-vote election; no electoral college distortion. But, you do get a lesser form of that distortion across the country - two parties could get the same number of votes nationwide, with very different numbers of MPs. If one party gets 15% of the votes in every single riding, they probably won't get any MPs, whereas if the other gets 50% of the votes in 30% of the ridings and 0 votes in the other 70%, they'd end up with 30% of the MPs. Extreme example, yes, but you get the idea. Also, the ridings are different sizes, so an MP from a very small riding could represent far fewer constituents than one from a very large one.
As a real example of that though - the Liberals right now have an overwhelming majority in parliament, even though they got less than half of votes across the country.
There's some movement toward a more representative form of elections - apparently the province of British Columbia is going to introduce some form of direct representation at the next provincial elections, but that's completely separate from federal elections.
Canada does not have the same degree of separation of powers the US does - the whole "checks and balances" thing. The PM's office holds a whole lot more power in Canada than any single body does in the States. This was actually deliberate - the Canadian constitution was drafted shortly after the US civil war, and the framers wanted to structure things so there would be more central control, in the hopes that conflicts wouldn't get to that point. If anything, the concentration of power in the PMO has gotten more extreme lately, probably far beyond the intentions of the framers.
And yes we do have conservatives; they are the official opposition right now. What we do with them is mostly to vote for them in the country, and for the liberals in the cities. Their power is somewhat exaggerated compared to their real support, because rural ridings tend to have fewer people, so farmers are overrepresented in parliament. And they're not just a little bit conservative, they're reeeally right-wing; very comparable to G. W. Bush-school republicans.