That will backup all the information related to your libraries and your Plex setup.
Just replace everything in the folder with your backup.
No. This folder can get very large for some users and backing it up can take quite some time, so it is best to run the backup when Plex is not being used. This backup is not automated since we would not know when Plex would be free long enough to perform the operation.
We are experiencing an issue if the person you invite does not have a Plex account yet. Have your friends create their Plex accounts first, then resend the invite.