It’s the nozzle diameter. Layer height you will most likely want to change, but it’s optional. a .5mm nozzle can print a taller layer effectively.
It depends on the settings. Very fine detail will suffer a little bit, and fillet radius parts may have a bit more of a stepped look to them unless you print with a very thin layer. It will also be a little more difficult to print very thin very narrow pieces, but larger parts should be stronger and I find the .5mm easier to get dialed in than the smaller ones personally.
You can, you may want to go with a thicker layer though. A .35 to .4 layer is feasible. There should be some existing .5mm profiles to play with.
Depends on what you are printing, and how fast you want to print it. The .5mm nozzles are excellent for printing large pieces fast. For smaller pieces the .35mm is generally going to be a bit more detailed.
I loved the .5 when I played around with the mini. I actually hardly even noticed the difference. I usually print .25 layer height with my .35 anyway, but with the .5, you can bump it to .3+mm and shave a bunch of time. Basically, for large manufacturing parts that don’t require super smooth surface finish, like the lulzbot parts, brackets, clamps etc etc, .5mm is the way to go, no need to waste time with a .35mm and small layer heigth. If you need to do smaller more intricate parts, go for the .35mm with lower layer height obviously
I think we do finer resolution today, but for the first 2-3 years the LulzBot parts were almost all printed at .4mm layer height. They are strong, work, and print fast. Nowadays I think we make them a bit prettier, but they don’t need to be.