I think I can answer #1.
The manufacturing functionality for D365FOB is being rolled out gradually. Currently, there are BOMs. Soon, there will be Assembly Management. Eventually (spring 2018?), there will/may be Production Management. Hopefully, there will also be lot/serial number item tracking as well.
Once Assembly Management is in place, you will be able to use assembly orders to consume several items and resources (e.g. labor) into new items. Some of the differences between production and assembly are timing, steps, subcontracting, and accounting.
For your needs, it sounds like Assembly Management would suffice. The main thing I would imagine you may need Production Management for is "Routings," i.e. steps in the production process. That is, if your process has multiple steps involving multiple work centers, machines, schedules, or production lines, you may want to wait to manage all of this with Production Management. If you can make do with just creating an order document one day and then and posting an order's data all at once when it is finished, Assembly Management works fine. As well, production steps can be handled with different work orders for different subassembly items in either Assembly or Production Management; this is a great way to handle things if subassembly items enter inventory.
I think I can answer part of #4 as well... among many possibilities, one thing you should be aware of is D365FOB is not quite ready for all the functionality discussed above. But, once it is, it will one of the more sophisticated SaaS manufacturing systems.
(For what it's worth, I'm also eagerly awaiting this functionality)
