1) As mentioned, that is showing you the SHIFT pattern, not the mode.
2) I leave mine in S5 and feather the throttle for shifts. Optimum setting is what YOU like.
3) The shift lights are on the tach. When running, you will see a series of yellow blocks and 2 red ones. The red ones denote red line. The yellow ones start with a number of them when cold to indicate you should not rev the engine too high until the oil temperature comes up a bit. Once warmed up, as the revs approach redline the segments will start lighting up from red line on down. When and how fast they light is determined by the RPM and how fast the RPM is rising.
The optimum shift point for maximum acceleration for each gear change on this car is red line. For normal driving, it is where you need to shift, like any car, it varies depends on circumstances.
'95 Alpine M3 LTW
'00 Dakar M Roadster
'02 Topaz M3
Red/White SRF #4 (Chassis 561)