Example of Category Blog layout (FAQs/General category)

Yes it can! This is a significant security improvement.

The safe mode limits PHP to be able to perform actions only on files/folders who's owner is the same as PHP is currently using (this is usually 'apache'). As files normally are created either by the Joomla! application or by FTP access, the combination of PHP file actions and the FTP Layer allows Joomla! to operate in PHP Safe Mode.

Well... how about never needing to mess with encoding settings again?

Ever needed to display several languages on one page or site and something always came up in Giberish?

With utf-8 (a variant of Unicode) glyphs (character forms) of basically all languages can be displayed with one single encoding setting.