There's different guides for different CFW but they all use the same exploit so it all boils down to different files on your SD card. I'm assuming you're not shooting for SX OS as they have satisfactory guides on their website so I'll link you to the alternatives which are
ReiNX and
Atmosphere.
CFW can load backups, in .NSP or .XCI format, launch homebrew, perform game modding, etc. Its a long list with new hacks and homebrew coming out every so often that no one person can keep up with them all.
The exploit used by all CFW relies on the bootrom of the console; this bootrom is read-only meaning we nor Nintendo can patch it via a software update. In English, its a hardware exploit. Basically, firmware is no longer relevant and the vulnerability of the console depends on the Serial Number. Now while the exploit is unaffected by firmware updates, CFW can be broken but since the exploit is a coldboot, meaning we have full access to the console, devs can just patch their CFW to make it work again.
The only way to play backups you don't own online is by injecting certificates from .XCI dumps into .XCI files (its impossible to play a .NSP file you don't own online since the ticket that launches it needs to be signed by Nintendo) but this is detectable by Nintendo if the certificate doesn't match the game. For example, injecting a Super Mario Odyssey certificate into Super Mario Party can get you banned.
Yes, you will just need a save manager such as Checkpoint or EdiZon.
This
thread can answer 99% of all banning-related questions you have.
You quoted the wrong person.