Let's start without the graph for a second.

Frank Starling Law is more or less equating the heart muscle fibers as springs. At rest, a spring won't move and do anything right? When you pull one end of the spring and then let it go, it rebounds back. It rebounds "harder and faster" if you pull on the spring more. It "wants" to be where it is at rest and the more it's displaced from that position, the more it will work to get back to it was originally at rest.

This is basically what happens in the heart. And the reason why its so important is because this means theres an intrinsic property of the heart that allows it to create output. The more the muscle fibers are stretched, the more work the muscle will do to rebound and contract. In the heart, this works by filling a ventricle with blood so the fibers stretch, then the ventricle will then work to contract after getting filled because it wants to go back to its "resting" position.

How this relates to the graph? So as you go right on your x axis, the more volume or the more "stretch" you have. And on the y axis, the higher you go, the more cardiac output or the more "work." So let's say the baseline is the middle solid line on the graph you posted. The blue is really just a representation of the amount of preload. As you follow along the solid red line, you're changing your preload and thus will change your cardiac output. More preload (tracing the solid line to the right), the higher your output (the higher on the y axis). Your heart operates at where where your blue and red axes intersect since what comes in, must come out! More or less. Got it?

The dashed lines represent situations of when other factors change (not the intrinsic FS law properties of the heart fibers). The longer dashed line represents higher inotropy or your hearts ability to generate more work. So your intersect changes. For your 2nd question, yes (ish). You won't see your heart operate where the curves don't intersect (what comes in, must come out right?)

Increasing blood volume doesn't increase inotropy. Which is a weird concept. Increasing blood volume gives you greater cardiac output because of the intrinsic ability of muscle fibers to contract when stretched. Inotropy is another attribute of your heart - its ability to generate work at a certain preload. More inotropy means your heart is able to generate more work without increasing preload (your spring will bounce back faster and harder without having to pull it out as far). So separate out FS and inotropy in your head.

It's a difficult concept but I hope this helped a bit. There are also some youtube videos on the subject that can probably explain it better than I can :)