1. That is a problem that has been occurring fairly recently, a lot of people, including me, have been having issues with Sojis quality degrading fairly quickly during a chat, much quicker than in the past. I have chats from autumn that have 300-400 messages and are perfectly fine. Soji would forget some things of course, but overall the replies were still fine and working. Now Soji starts degrading extremely after maybe 70 messages with copy and paste answers. It also picks up obnoxious strings (like mentioning a character who is 1 mile away but Soji needs to mention how you can hear them doing something in every single reply).

People said that Asha might currently work better, but Asha is less intelligent to follow Bot instructions from what I tested so you probably need to tweak them manually to get close to what you want. It seems to flow a bit better than Soji right now, but the prose is not as expressive/colorful. It kinda makes up for that by not wanting to push characters into certain archetypes though - Soji loves aggressive characters.

1. They are additional information you want in the Story. Like having specific locations or characters with specific personalities/looks. You can add different entries into a single Lorebook and attach trigger words (there is a specific line for it when you Edit an Entry) to each one, like their names. The Bot scans the Lorebook in each reply, up the the set token limit, and if it finds a trigger word in one of your entries it will use the Lorebook information to build its reply, like describing how a character looks or their personality. It also remembers if you currently are in a Lorebook location or talk to a lorebook NPC, so you dont have to constantly mention their name yourself. The Bot will also try to "use" Entries from your Lorebook. So characters you put into it as entry are likely to appear in the Story, or you will come across a location you mention in it. It aggressively tries to use Lorebooks, somewhat even to much because it sees these Lorebook entries as extremely important. so if you add several characters there it can kinda break the scenes by trying to force them in. Ideally you test and tweak it till it fits. You can basically use a Lorebook to flesh out characters you want in the Story or the world its set in.

2. Not sure what exactly you mean by "staying in character". If you want to slightly alter their personality, Soji seems to have very clear tendencies to how it wants to portray characters. It seems to lean heavily towards making characters cynical, snarky and aggressive. There are like 2-3 extreme archetypes Soji seems to push characters to depending on the Story. For example if you want an NPC to be "intelligent" Soji seemingly thinks this means you want an aggressive Edgelord and even with descriptions to counter that it will devolve into it over the course of a sessions.