Encryption in iOS 10, password 4 digits?

Question

iOS

How does encryption work in iOS 10?
1. Does the password setting format affect it? For example, if this is a 4-digit password (I see no reason to put more, when using a daw, that everything is deleted after 10 incorrect entries)
2. Does encryption work when the phone is on? Or only if it is completely turned off? Roughly speaking, is the phone protected enough just in locked mode?
3. In the default state, does icloud copy data somewhere or not? In a new phone, for example, if nothing was turned
on iPhone 8 Plus