All right, posting how I fixed this email problem for noobs like me:
1) Activate the DEBUG mode on Flarum (simply google it, but you have to edit config.php and change false to true on debug mode). The debug mode is not apparent at first, but you will see it on the red error that appears on the bottom left corner when something fails to work. It has a link, hit that link and a popup will show you the debug error. Pretty classy.
2) My problem was that I was trying to use DREAMHOST. They don't provide (for some reason) email certificates for their domains, or they aren't providing it at the moment, so I switched over GMAIL which provides it and that's about it.
3) If you are using a host that has the same problems I do, simply do not fill the ENCRYPTION field in the EMAIL settings on FLARUM. Yes, your emails won't be encrypted, but at least you will get emails working. Best thing to do is to setup GMAIL to use it with it and talk to your hosting because they should be providing the email certificates.
Where can I buy a cup of coffee to the mods and the Flarum devs?