1. A content definition is a JSON Schema v4 document. As such, the valid property types are those supported by JSON Schema itself, described more thoroughly here:
(Specifically, look under section 4.2.1 Instance Data Model)
2. The default path capability is frequently used to make sure that content of a given type is stored into a predictable "folder" structure. You're right to be inquisitive about what this means since everything in Cloud CMS is stored in an arbitrary content graph. We don't technically require folder structures at all.
That said, we do offer "folders" as a core feature to our product. For us, a folder is just a parent with child associations. Folders offer some interesting properties - the most important one being containment so that ACL assignments to a parent propagate to the children. You can delete a parent folder and delete all of the children within the graph underneath it, etc.
The "default path" capability lets you specify precisely how content should be stored from a folder perspective. The main benefit is that, this way, your editorial team doesn't have to navigate to the right folder to do things. It reduces the number of steps. They just work an article, save it, and it gets saved to the right place.
The "right place" might be the place where your team expects to find things if they were to go in by folder. It also might be the place where an integration looks for content to exist (if the content is replicated down to disk). In other words, it may have runtime implications (or it may not). It's entirely up to you. It's an optional feature but one that we offer to simplify and reduce the number of steps the editorial users have to take.