-
Yes mods work, but they are more difficult to get running. I haven’t tried them myself.
-
Any Bluetooth controller should work. Lots of people have used PlayStation. I’ve used an 8bitdo, Nintendo switch, Xbox, and Google stadia.
3.64gb one is really intended to just hold the operating system and some compiled shaders. They expect you to buy an SD card to store your games on that model. Games take the same space if not a tiny bit more on steam OS to hold the extra shaders.
They are emulating them with a program called yuzu. It is for emulating roms of switch games you already own and didn’t acquire through illegal means. That would be very bad and no one here does that…