Some months ago I started to write a book about SEO and Joomla, I think you can convince me to finish this..
About your questions:
Can you please provide the most common installation set up in a clear manner?
This is the default settings (what is now insite the configuration part)
For example, what am I suppose to fill in for the Title field in the Meta Settings global setup so it doesn't take the entire site's default Title but individual items'?
The configuration Title settings is the default format of how the title should be showed. In this case it is [TITLE]-[SITENAME]. So a content item title will be within this format whereby the title is the content title and sitename is ofcourse the sitename. Personally I'am not "happy" with this configuration but a lot of users where requesting this kind of format. In this case I should advise you to set the title format [TITLE]. Notice that the title tag is one of the most important tags in relation of SEO and that you should put the 'strategic' keywords within your title.
What the heck is Meta Tag Robots Settings? There are 4 available settings and I think if you just gave a brief explanation of each, people would appreciate your product more.
With the tag robots you can let the search engine (like Google) now if the pages may be included within the search engine (= index), not be included within the search engine (no index), that links may be followed on the specific page (follow) or that the links may not be followed (nofollow).
Why individual items don't follow global Meta Tag Robots settings by default?
Default for search engines is index, follow if the tag is not present. Therefor the default settings is that it's not showed. Some SEO will always display this tag since they are convinced that it has influence (in this case you can apply the default settings on index, follow) but personally I don't think this has influence.
What are the examples of custom Meta fields? What do you recommend and what people should be filling in those tags?
examples are copyright, rating, subject. In this case some believe that this can give advantage in some search engines. What I personal always do is put the sitename within the copyright field.
What is URL meta and what do we do with it?
URL META settings you can assign titles and META data to URL's. This is for example if you are using third party components where you don't have the ability to assign META data and titles within the component self. Just take the output URL of the specific page and you can optimize the page.