I feel Apple has some corporate greed issues with their Family Sharing feature that they designed. The system locks your credit card in, you can't remove it, which negatively impacts families budgets. I will detail below.
First let me answer your questions:
In your first question, the latter part is true: purchases by person X will only be available to person X. This is according to the Leave Family Sharing article on the Apple Support site.
Under the section: What happens to your content when you stop sharing? it says
Any content that your family shared with you isn't automatically removed from your device. You can purchase it again or remove it to free up space on your device. If you downloaded an app from a family member’s purchase history and made In-App Purchases, you'll need to purchase the app yourself to access your In-App Purchases.
Any DRM-protected music, movies, TV shows, books, or apps that you previously downloaded from other family member's collections will no longer be usable, and other family members won't be able to use content downloaded from your collection.
In your second question - the answer is Yes - apps are shared within the Family.
However, I recommend you do not turn on Family Sharing for 2 reasons:
You have to enter a credit card to turn on Family Sharing. Once you do this, your payment method cannot later be switched to None (i.e - you can't remove your credit card!) without turning off Family Sharing...oh how nice....
So lets turn off Family Sharing, should be easy enough. Well, not if you have a child on your Family Sharing that is under 13. You can't turn off Family Sharing if there is a child on your account under 13. So now you are stuck verifying your credit card all the time, because you can't ever remove it.
The Family Sharing hurts families budgets because, kids are kids and get the password and make purchases and rack up the bill. So you want to remove the credit card, but you are restricted by Apple, because a credit card is a requirement for Family Sharing. And you can't turn off family sharing if you have a child under 13. So you are stuck.
It shouldn't be this hard to remove the credit card, yet it is. Shame on Apple - it feels like they have you and your credit card trapped in their system.