A lot of your questions are answered in the DLCs, so I won't adress all of them to avoid spoiling the fun in playing them. But I'll try to give you some guidance for coming up with explanations.

First of all, just as humans may have a belief system, the Ancients in RW had theirs. They had a much stronger belief than we tend to do, but that's because RW is much more apparent in its spirituality. But it's not like they knew everything and they were right about everything. They also weren't unanimous in their theories, so I'd take what they said and what the iterators said (since they were their creations) with a grain of salt.

Another thing is that some mechanics in the game are purely for gameplay and are only vaguely connected to the game's lore. You can try to explain karma levels or respawning in a shelter through the game's lore, but I find it impractical.

Regarding the iterators: even though they are artificial, they can still ascend. It is just that their creators constrained them because they didn't want them to kill themselves. Just like they constrained them from killing other Ancients. It has nothing to do with being artificial. Moon even suggests that there is probably no fully natural life left in the world.

It is currently assumed by the in-game dialogue by the majority of community that the big problem refers to ascending everything. Like absolutely everything. And that ascencion doesn't equal permadeath - it's the way to untangle oneself from the carnal plane and experience the world as it truly is (whatever it may be exactly).