For your second question, consider the following example:

1) Level one
a) Level two
2) Level one
a) Level two

The "Paragraph number (full context)" option always include a full reference, for example to "1)a)" while the "Paragraph number (no context)" option never does. In this case, the latter might be unclear, because a reference to "a)" could mean either "1)a)" or "2)a)".

The "Paragraph number" option includes the full context if necessary; otherwise it doesn't. For example, if a reference to "1)a)" is located under "2)" then you would see the full reference. But if the reference is under "1)" you would only see "a)".

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Stefan Blom
Microsoft Word MVP

Microsoft 365 apps for business
Windows 11 Professional