Boot holding "Select" and state Luma3DS version

 

Then just update via system setting

 

No

 

Not usually, though rarely it can break things so that your system won't boot until a new CFW version comes out so always make a NAND backup before updating. And when a new update first comes out always wait a few days to a week to make sure nobody else has any problems. But as of right now, all you need to do is make a NAND backup and then update via the system menu. Also take the time to make sure you have a bootrom and otp dump which if you are using boot9strap (which you most likely area, unless you deliberately installed fastboot3ds) can be made by holding start+select+x before turning on the system and keeping them held until it boots, note that there will be no indication that the bootroms/otp were dumped so you will have to check your sd card to see if they were dumped.

An otp dump is absolutely necessary to recover your save data if your 3ds system should ever break or get lost/stolen and you should always have a fairly recent NAND backup and making sure to have both (and copying them to some place safe along with everything in the "Nintendo 3DS" folder) before updating is a good way to avoid possible problems later.

 

For 11.10.0 and 11.11.0 that is the case (as 11.11.0 only updated the eshop applet mint) that is true but that is not always the case so it pays to wait at least until the update has been reverse engineered and for more complex updates waiting a few days is not a bad idea.

As for the otp and nand dump, making a nand dump and checking your otp dump is something that should be done regularly and getting in the habit of doing so whenever there is a firmware update (even if said update is confirmed to be safe and not break anything) is a good way to make sure that happens. Same idea as replacing smoke alarm batteries whenever you set your clocks ahead/back for summer/winter.