1) You can do whatever you like Just keep in mind that the more crowded it gets, the less city sites for you early on. Also keep in mind this is not Civ5. Where there are AI's there aren't monsters to fight. 

2) It's not really an answer for this. All factions have their strengths, Yithril with berserk and juggernauts can be fun, but no archers. Tarth has Double Strike for all troops, so that is also a sweet faction.

3) Clear them out before settling, or make sure you don't make monuments etc. to early, that makes them start moving if they are inside your borders.

4) Again, not an obvious choice to pick from. But a fair warning, the default sovereigns and units aren't very good, so you'll want to customize later. (you can get mages with 100% more damage from the same tech if you make them yourself, that's probably the most extreme example) However, sovereigns with Earth and Water Magic can make the beginning easier with Enchanted Hammers and Inspiration. (+1 Materials and +1 research at the cost of two essence slots) Picking a sovereign with either of these is probably a good bet if you want a boost to your early cities. 

5) Magic Dense, Monsters Dense, Quests Dense. Epic tech speed.

But really, if you are new, don't worry too much about stuff while you learn. Just crank the difficulty down on monsters and AI's instead and have fun.

I think they have done a good job in making each faction play differently. Tarth adds some bad habits about wandering close to monsters without worry that the other factions don't have, but you can learn other habits from the other races which could be detrimental when playing other races. Magnar will get you in the habit of building a lot of fodder units, but that doesn't work so well with other races. Altar will get you used to playing with Hero stacks, but that is not a good strategy without henchmen. Tarth is one of my favorite races and the habits you learn from Tarth are easily changed.

I'm also pretty new to the game so take with a grain of salt but the Tarth racial traits on +3 attack for armies of 3 units or less doesn't seem that good. I generally want to have as many units in a group as possible to increase damage output and and increase the chances of units coming out intact. I've never played them or really much at all, so maybe there is some Tarth strategy that I'm overlooking. Don't know what the designers had in mind.

I chose Gilden as my first faction to play, I don't have any regrets at all, its just like playing my ret paladin in wow <.< So much that I felt like i'm at home.