Wylde, I am VERY far removed from being any sort of expert on suspension setup. It's just something that I'm trying to get my head around since I bought the 12 and my KTM dual sport a couple years back. Prior to that, my bikes have not had any sort of adjustability other than maybe preload.
I will try an answer your questions though to the best of my understanding & ability. I'll rely on others here to correct any errors on my part.
Ok, so understand that your "preload" adjustment has nothing to do with the hydraulics of your forks/shock. All your preload adjustment does is change how much your spring(s) are compressed to start with. By increasing the preload, you are physically compressing the spring(s) further. Think about it, if you have a coil spring in your hands and you try to compress it, it's easier at first, but then gets tougher as you continue to compress the spring. That's all you're doing when you adjust the preload.
So what does that mean as a practical matter? Well, if your front end is diving when you apply the front brakes, or if you ever find yourself "bottoming out" the forks, then you need to increase your preload to start in all likelihood. You can determine the necessary amount of preload by measuring "sag" as discussed in the videos and various articles, then fine tune to taste. There MAY be enough preload adjustment to get the sag set correctly. It's possible though, especially if you are a bigger/heavier guy, that even with max preload you still cannot get the proper sag setting, in which case you'll need heavier rated springs.
If you don't have a helper to measure the sag distance (like the guy did in the video), you can put a zip tie around the fork tube right at the fork seal wiper, then get on the bike to compress the forks & get back off. This will push the zip tie down and you'll be able to measure from this point to determine your sag.
Compression damping & rebound damping are the adjustments for the hydraulic aspects of your suspension. Without the hydraulics, your bike would just pogo along on the spring suspension (like a car with blown out shocks). Bear in mind that these settings are relative to your preload settings, as well as your fork oil weight/condition (which is why you need to set preload/sag first, and why your compression/rebound settings should be at the softest settings while adjusting preload).
Just as the names suggest, compression damping affects the amount of travel and rate at which the forks/shock compress when you hit a bump. Likewise, rebound damping determines the amount of travel & rate at which the suspension springs back after being compressed (again, relative to the preload settings). Not enough rebound and the and the suspension "uncompress" too far & too fast, again, leading to a pogo'ing effect.
Clear as mud now?
My modesty is FAR superior to yours.