However, in response to your questions:
1. Activity happens in Places. Within an individual roleplay, the two sections are indeed interlinked - the Activity section shows all posts, the Locations section shows posts IN that location. This is, of course, best appreciated where a roleplay has multiple locations; something not all roleplays need.
2. See above, that is the connection between the two.
3. Nothing is wrong. We have a no-delete policy here on RoleplayGateway, so you won't be able to delete the roleplay.
4. See above. And if you choose to give up a character, they are moved to the 'Orphanage' where another member can take the character to use as their own. This feature is especially useful if, for example, someone leaves a roleplay and they have a pivotal character. They can abandon said character and allow another player in the roleplay to take over that character's role - very useful to maintain consistency and the like.
5. This question should probably be posted in the RPG Design forum if you are wanting specific feedback on the roleplay. If you want help and advice on how to better craft your own roleplays, then feel free to make a post in the Roleplay Academy asking for some guidance.
Hope that helps.