I think Signal did a great job of answering a lot of your questions. I'm going to put in my 2 cents on a few of them.
1) do levels really make a difference overall? I mean, sure my heroes can do more things, but I haven't found any huge difference in gameplay between level 1 and 5.
Aside from what Signal mentioned, higher levels will unlock certain abilities for specific heroes (e.g., knights, monarchs and spies get additional stances to use during duels, wizards get new runes and the ability to memorize more spells, etc.) Also, certain quests are only available if a specific hero has met a minimum level requirement - level 5 seems to be the one I've seen most often.
3) what's the best strategy - focusing on one or two Heroes or get a new one for each quest?
4) what's the best order to get heroes in?
I'm not sure that there is any single best strategy regarding heroes. I think how you play is going to depend on which ambition you are working on as well as any watcher achievements you may want to complete. Some achievements require you to purposely neglect certain aspects of your kingdom or raise your renown using only a few heroes, so if you are working on those, they will affect your choice of heroes.
As signal mentioned, it is nice to get at least 1 hero to level 10 because after you complete an ambition you are given a choice to make any hero from your current kingdom the monarch of your next kingdom, and it is pretty nice to start off with a level 10 monarch from the beginning. I happen to find the monarch pretty boring to play so, unlike Signal, I tend to focus on other heroes that I enjoy more.
5) 50 QPs doesn't seem much... I'm guessing you can't have all the heroes in one kingdom before you run out of quest points?
Sure you can. My first kingdom I was able to get all of the heroes in place by finishing all but 1 quest at platinum level which gives you the most RP per quest (more RP=more buildings=more heroes). What you most likely won't be able to do is level all your heroes - in that first kingdom I never played my bard or merchant even though I had both of them created. There are also ways to stretch you QP - either by selecting quests with a lower QP cost or by annexing one of the territories that has a benefit of reducing the cost of all quests by 1 QP. Finally, some ambitions may give you more QP to start with. I'm working on No Quest for the Weary and that ambition starts with 60 QP.
6) How do you pick quests? For now I've just picked random ones that use my new Heroes...
Again, this is going to depend on what ambition and achievements you are working on. The things I generally consider when I choose a quest are:
- Is a legendary trait available?
- Will the quest improve an aspect that is low?
- How many RP are awarded for completing the quest at platinum?
- Is there a particular hero I want to have active right now (e.g., I finally got all the pieces to make a Doomsword so I'm gonna look for a quest that allows me to play my blacksmith so I have a chance to craft it)?
- How will this quest affect my ability to complete the ambition or watcher achievements I'm working on?
7) Do you build a new building between each quest or wait?
This also depends on how you like to play and what ambitions/achievements you are working on. So far I have chosen to add buildings and heroes as soon as I have enough RP to do so. Sometimes this is after every quest, but as your kingdom develops this make take a couple of quests to earn enough RP to place a building. There is at least 1 watcher achievement that requires you to save up a lot of RP, so if you're working on that one you may decide to hold off building to save up your RP.