Caramelization and caramels are not the same.
Yes, its a little bit confusing, but youll get it in a minute.
Caramels are the chewy candies you are familiar with. Theyre made by cooking sugar, cream, corn syrup, and butter to 245° F. Their brown color comes from a reaction between the sugar and the protein in the cream. This reaction is called the Maillard reaction, after the French scientist who discovered it. The rich brown color of toasted nuts and barbecued meats also comes from the Maillard reaction.
Put simply, the Maillard reaction occurs when part of the sugar molecule (the aldehyde group, if you must know) reacts with the nitrogen part of the protein molecule (an amino group). The resulting series of reactions is not well understood even by food scientists, but it leads to the brown color and many flavorful compounds that are yet to be identified. 
Caramelization is what happens to pure sugar when it reaches 338° F. A few tablespoons of sugar put in a pan and heated will eventually melt and, at 338° F, start to turn brown. At this temperature, the sugar compounds begin to break down and new compounds form.
As with the Maillard reaction, the details of what happens during caramelization arent well understood. But the results are appreciated all the same. For example, caramelized sugar is often used as decoration on fancy desserts. Try caramelizing sugar yourself its easy!
You can also try making flan !
