Correct. In your first XI, not your subs.
For example I had McTominay and Mittelstsdt in my team. They earned total of 6pts.
I've subbed McTominay for someone else. And therefore sacrificed 3pts in the hope the new player subbed in scores more.
I believe so, but you have to do it with a player that hasn't played yet.
The formation will change when you select a player in. So if you put in a defender for a striker, it'll automatically change to 5-3-2.
You can make transfers in/out of your squad.
Plus you can make subs during a round of games - either for a player that hasn't played yet, or if they have, you lose the points they've got your already.