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if a user has view all access on a custom object using a permission set, will he be able to access all the records of all users even if OWD is set to private ?

if user has only view access on custom object using a permission set, will he not be able to access all the records of all users if OWD is set to private ?

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Correct. View all access permission give access to all records. View access permission would give access to view his own records or records of his subordinates in role hierarchy.

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  1. Permission set is used to extend the permission inside organization so if view all is defined it will override the OWD.

  2. If OWD is private and if he has view only access he can see only his own records and subordinates in role hierarchy.

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