1- should one best pick a 'standard' wallet or one with 'two factor auth'? (Probably two factor?)
It depends. "Standard" creates a 'normal' HD wallet, that can be backed up with a 12 word seed. It allows for setting a wallet password and wallet file encryption. It will generate standard '1' type Bitcoin addresses. These can be used to sign messages and are easily exported if required.
A "2 factor" wallet gives the added security of requiring a Google Authenticator 2FA code to send transactions etc, however this uses a third party (TrustedCoin) who charge a fee for providing this service (NOTE: 2FA fee is in addition to normal BTC transaction fee!). Also, it is a special version of a MultiSig wallet, so it generates '3' type addresses which means it is difficult to sign messages and/or export keys/addresses. They (2FA) will likely NOT be supported in any forks (TrustedCoin don't support BCH and I doubt they will support BTG).
If your goal is max compatibility, I'd recommend "standard".
2- at the option screen to create new seed, you can also use public/private keys? What does the latter mean/do?
It will create a non-HD wallet, by importing public or private keys that have been generated elsewhere. They will NOT be able to be backed up with 12 word seed.
If you use public keys, it generates a "watching only" wallet... Can view but can't spend.
3- when or why do you use the 'sweep' function?
Instead of importing a private key into your wallet... You can 'sweep'... This simply creates a one off transaction that transfers the entire contents of a private key (or keys) to a specified address. Normally used to retrieve coins from a paperwallet into your HD Electrum wallet... But can be used with any private key from any wallet.
NOTE: You should consider any private key that has been "swept" as compromised and any associated addresses with that private key should not be used again.