I suppose what I am struggling with is if you cant fake someones transaction what do you gain from manipulating the block chain? Or is this where I'm missing the point and mining isnt about mitigating the threat of individuals creating fake blocks but more just a means of having to use a network to govern it?
I will simplify it so I may not be 100% correct but, let's try - you will have to try to think of two chains of events happening in paralel.
Let's say a malicious player send a transaction of 1M BTC. And at this point he starts his paralel "business" of attacking Bitcoin, i.e. he starts mining blocks, but he doesn't tell everybody about them, only to his (many) miners.
At some point the 1M BTC transaction is confirmed and he quickly trades that and cashes it in. (As a note you should read at the end: only confirmed transactions matter and even then, on big amounts the businesses may wait for 6 confirmations, which is one hour; this makes the scenario harder to be implemented, hence even more unlikely).
Now, the trick is that "the world" always considers as valid the longest chain. This is how Bitcoin consensus works. And meanwhile, in a closed environment, he mined more blocks (in the past hour, let's say) than the rest of the network, the blocks are correct, and this will become the "correct" chain, since it's longer. Even more, in this closed environment, he has made and confirmed another transaction spending the same 1M BTC, but sending to himself.
The world will use the new blockchain, the old one will be forgotten and our guy has cached in 1M BTC he didn't spend.
...Just the thing is that there are so many miners now that trying to do this would cost far too much.
This was the 51% attack.
Another way of "faking" can be transaction malleability attack. But that not possible on Bitcoin blockchain, period.
Another way of "faking" can be persuading people consider unconfirmed transactions as good, then double spend them (which is possible as long as they are not confirmed). But this is not an attack, this is taking advantage of newbies.