1 - Actions will either always execute, or only execute based on  prevailing conditions.

2 - Actions can be active or inactive.

1. Select the object you want to create the record for.
2. Add the fields you want to update.
3. Enter the value for the field.

1 - The context object is

The objective of the Context Object is to provide data values from the current object (the Data Source specified in the Flow Settings) to be used for fields in the record being created.

The way this is done is that the system provides the exact text needed to tell the system which Context Object Field to use.

For example, I select the "Stub" Context Object. I then select the "Area" Context Object Field. The system generates the text "{Stub_c.number_c}". I then select the appropriate field of the record being updated, place my cursor in the Value field of that row, and click the "Insert" button.  The system will now know that the field "Number of Locations" in the new record must be updated with the value that is in the current Stub records Area field.

1. The Context Object is based on the source object and its related objects. It can also be System variables, or any user defined variable.
2. Based on the Context Object selected, the fields in the Context Object are displayed.
3. The system will automatically create the text needed to insert that field into the Value field of the record field being updated.
4. You can use as many Merge Fields as you need. Just keep changing the Context Object and Context Object Fields to get the appropriate text for the Value field.