Those are a lot of questions but most (probably all) are answered in the official documentation. Try this page.
The linked docu page comes up as one of the first results when you google "marketing cloud contacts", by the way. If you already found this page and have trouble with the explanations (which sometimes aren't too clear on specific topics) you should say so and inquire about those specific points you are not sure about.
This makes the question less broad in scope (often a reason for down votes or people putting it on hold) and shows that you tried but got stuck. This is what this community is about after all: providing help when you get stuck after trying.
Pretty much all of us have been at this point once in a while and some now give back for the help they have once been provided. Those people usually don't appreciate it if they feel treated as no-cost freelancer or research assistant. ;)