Hello,
1. generator will "crawl" your site, finding all pages that linked on website. Otherwise, you can add more URLs in "Additional Starting URLs" setting.
2. you need to run generator via browser to refresh sitemap or create a scheduled task in your hosting control panel to do that automatically.
3. Please check via ftp that data/sitemap.html file exists.
4. "Include only" means that only the pages matching this setting will be added in sitemap.
"Parse only" means that only the matching pages will be "fetched" from your website to find links to other pages.
5. [ External links are visible to logged in users only ]
6.
https://www.xml-sitemaps.com/documentation-xml-sitemap-generator.html