We like to get right to the point around here.
Anyway, for the other two questions:
2: This is just the maturity rating which is from 1-7. A one meaning it's wholesome and full of family hugs, while a seven means its grimdark and if there's a family hug, you're probably doing it while naked with your sister. Just try to use common sense when you're assigning the rating to whatever you're creating.
While it says there's an "8" level, there actually isn't. At least not technically. If you've got a story that's pushing the limits of degeneracy (And I'd advise you NOT to do that unless you know what the hell you're doing) then give it a 7 and slap an extra warning on the front page.
Of course this won't actually stop anyone from reading it who isn't supposed to, but it at least makes it look like you made the effort.
3: If you make a story where the main character never actually dies, it still depends on the endings. You could still "lose" without actually dying. There's examples of stories like that around here. The difficulty level is sort of arbitrary, usually I just take into consideration how many death/shitty endings a story has and assign the level accordingly.