Hello,
1. yes, priority tells how importan is that page *comparing to other pages on your site*.
2. frequency tells *approximately* how often the content on that page changes, to give an idea for google bot how often to revisit that page (it's not a directive but just a hint for google though).
3. in case if there is something in common in URLs of your sections, it's possible. For instance, if your sections links are:
domain.com/section-1/
domain.com/section-2/
etc.
then you can define attribute as a *common substring* for all those links:
section-,1.0.html,,daily,0.9
4. Also, there is an "automatic priority" otpion that puts priority according to a "depth level", i.e. how far the page is located from homepage (how many clicks are require to get there).
5. The index page gets the higher priority automatically - the value you define in options/
6. With auto priority disabled all pages get the same priority.
7. Individual attributes will work in both cases, overriding the values currently assigned.