I think I understand well enough to explain it to myself now. My mistake was in forgetting that you can write any constitutive equation you like, with any stress/strain measures. Usually, you try to pair stress/strain measures that complement each other. For instance, you could write the equations of linear elasticity, valid for small strain/small displacement,
as
YM*eX=sigmaX-nu*(sigmaY+sigmaZ)
YM*eY=sigmaY-nu*(sigmaX+sigmaZ)
YM*eZ=sigmaZ-nu*(sigmaX+sigmaY)
where eX,eY,eZ are engineering strain,
e(i,j)=0.5*[du(i)/dx(j)+du(j)/dx(i)], sigmaX, etc. are engineering stress, defined as normal load divided by initial area. YM==Young's modulus, nu==Poisson ratio
This is an extremely useful constitutive relation because it works so well for large numbers of stress states we encounter--many strains we encounter are linearly proportional to the stress.
Or, I could have written a constitutive relation similar to linear elasticity, this time, using 2nd Piola Kirchoff Stress, and Green-Lagrange strain. These would be valid for arbitrarily large displacements and strains, but they look similar to the linear elasticity:
YM*E(1,1)=S(1,1)-nu*(S(2,2)+S(3,3)), etc. where E(1,1) is Exx (normal strain in x direction), S(1,1) is Sxx, 2nd Piola Kirchoff Stress in the x direction.
Just because I write this nonlinear analogy to linear elasticity, doesn't mean it is as useful as linear elasticity. Does it fit any data, or any observations we have made? Not many, in fact there's an analytic solution of the deformation of a bar of this material which gives you counterintuitive results.
I could also choose to model my material with a power law curve fit, which 'looks' like Ramberg Osgood, but uses true stress and true strain instead of engineering stress and engineering strain. It's my choice. The best reason for doing so I think is that I can describe the material's behavior better with the power law that uses true stress and strain, than if I would use engineering stress and strain--using the true stress/strain fits the data better, I guess that's one way to put it.
So I have a question for those of you who are inputting stress-strain curves in terms of true stress and true strain:
If you use true stress and true strain (it matters not whether you put a curve in the FEA, or a table of points on the true stress/true strain curve; the important thing is that you are using true stress/strain) then when you input true stress and true strain material curves, is your FEA solution valid for arbitrarily large displacements and large strains? (I presume most of us have the same solution process-the FEA solver runs through a linear solution, to get the first guess for the nonlinear solution).
From the FEA software's perspective, the software doesn't care how you calculated the true stress/true strain behavior of your material; it just takes the constitutive relation you give it and computes away.