#2 No they don't. You get stuck in an unwinnable game. At least that happened to me ages ago (could be fixed now)

The AI can and will try to win using the Spell of Making.

Swamp is useless, I don't know about rugged though.

Sjaminei was talking about a bug. Normally, you just have to backstab your friends to win 

It is hard to say, since every map stamp (small chunk of a map design) is part of the generic style. Thus, it is very possible to get any map stamp no matter your settings. The probabilities of getting certain map stamps are more likely when selecting different stamp styles.

So it is hard to say which would give the least amount of settable spots, but swampy or desert should give you some of the least settable spots. Ravaged is also another good one to try.

The other settings all pick from the fertile tile set.

swampy represents the namesake swamps. You are more likely to get swamp terrain. Swamp terrain is unbuildable by cities (cannot remove it by conventional means) and makes for slow movement for troops (unless you have special abilities)

The ravaged terrain does contain more chasms and rugged land (a type of plains that is less fertile than the other 2 types of plains)

There are 11 distinct wildlands in the base game (no DLC). You could try setting the Wildland density to its highest value and playing on a Huge random map, or you could try playing one or more of the pre-generated maps (I would suggest that the 'Wildlands' map might be a good one to try, though I believe that one is part of the Maps DLC).

You may also be able to make a semi-random custom map with the Cartographer tool that includes all of the wildlands, but I cannot give you advice on how to do that.

If you want all 11 you probably need to create your own map.

Go to \FE Legendary Heroes\data\English in the installation directory, locate Wildlands.XML, and open the file with a text editor (notepad, wordpad, any XML editor you may have). Delete some of the entries, noting that you must remove everything between <WildlandsType Internal Name ... </WildlandsType>, including the tag, for each wildland you want to remove. Then overwrite the original file with your modified version. I strongly suggest creating a backup Wildlands.XML file before doing this.

You could also edit the ElementalDefs.XML file, found in the same folder as the Wildlands.XML file. Find the line beginning with <WildlandsPerLandTile> and increase the value within the tag. Then find the line beginning with <DistanceBetweenWildlands> and reduce the number within that tag. This should increase the total number of wildlands you can expect to have on any given map. Note that it may not be necessary to change the second item.

Note that I have not tried either of these methods, so I cannot guarantee that they work and will not affect game stability. Also note that I don't know how the distance between wildlands is measured - if it's between borders, you should be able to reduce the distance between them without issues of overlapped wildlands, though you may have issues with generic map stamps. If it's between centers or some other defined point of the wildland, or if there are generic stamps overlapped with wildland stamps, you may experience map generation issues (e.g., abnormal terrain features), or it might crash the game. I strongly recommend that you keep backups of the original versions of any files you change, and also of any altered file versions that produced results that you liked, so that you can switch back to a previous version which you liked better, or which worked, if you run into any issues.

Go to \FE Legendary Heroes\data\English\Core Stamps and either delete stamps you don't want to see or edit the frequency line of the XML file for each stamp you want to see more or less often.

I'm not sure if editing the frequency changes things - I seem to recall Heavenfall saying that that didn't work.  I'm pretty sure of it.

When you removed the stamps, did you also edit the wildlands.xml file? Try commenting out the wildlands that you don't want instead of deleting the stamps.