Hey, Jennifer!
1. I recommend starting with 3 stages that are more “high-level.” A good example would be Lead > Marketing Qualified Lead > Opportunity (depending on how you’re using lifecycle stages). From there, you can start to play around and expand. Do folks sometimes skip MQL and go straight to Opportunity? Mark MQL optional. Is there a specific ad campaign or form submission that you want to see how it’s influencing L > MQL? Put it in between these stages on its own, then mark it as optional, too.
2. Yes -- optional steps will switch the view to Sankey. This allows you to see exactly who (and quantity) is skipping a stage altogether.