To address points 2 & 3:
Dynamic Range refers ONLY to the output volume of a Dolby Digital AC3 signal as it is ignored by all others. Full dynamic range is as the name implies the entire frequency range, low bass rumbles and ear-shattering highs included. As you decrease dynamic range, you diminish high volumes at either extreme and so explosions are softer but dialogue always remains the same. In other words, you are controlling the range of volume during playback. If you are listening late at night or do not wish to be startled by sudden, loud sounds you can set the DRC to std or even min. Since decreasing the dynamic range also increases the apparent "loudness" of softer sounds (bringing them out of the shadows, so to speak) it is also useful if you think your setup/speakers need a little help.
Bass redirection deals with whether low-frequency sound (usually 80/90Hz and lower) is sent exclusively to the front speakers alone, subwoofer alone, or both front speakers and subwoofer. If you use a sub with satellites or bookshelf speakers with limited dynamic range then you would set this to "Subwoofer" and let it handle the low-frequency sound. No point in sending a signal to speakers that they cannot handle. If you do not have a sub and have floorstanding speakers you would choose to send to "Main", i.e. fronts (no choice!). Finally if you have floorstanders AND a sub, you can send the signal to both. This is especially useful if your avr does not allow you to set the sub crossover frequency. You can then set it on the sub instead so that there is a suitable overlap with the floorstanders.