OK, if you have been playing a few years I am sure you realise that this is a HUGE question - there are so many different ways of approaching your questions. Anyway, here's my take on them, from the assumption you are just starting a save, or just taken over at a new club:
Once I know which club I am at, the first thing I want to know is where I am expected to finish, media prediction and board expectation/philosophy guide me here. If I am expected to be challenging near the top I will be looking at this with a view to controlling most of my games if it is a relegation dog-fight I will be looking at more defensive/counter approaches. So a top team I will develop an Attacking, a Controlling, and a Standard/Counter approach. Looking at a dog-fight I will lean more towards a Defensive, a Counter etc.
Tactics : How do you decide what formation/team instructions you use for your team,
Well, when i first look at my squad, I got to tactics screen, select the 'Reports' view, and sort by Current Ability - that way my assistant ranks the players in order of who he thinks are the best. I am looking for my 'best' 3 or four players. I place them on the tactics pitch in their preferred positions - with three or four of them in place, I start to see an indication of base formation, so will I be using AM-L/R or M-L/R? If one is a DM then I am looking at 4-1-2-3 or 4141 or a narrower formation 41212. These top three or four players are what I would build the formation around as I want to get the best out of the best players.
Looking at their attributes and personalities, I work out how I expect them to play both when our team has the ball and without the ball - are they going to be very mobile? hard-working? pacey? High vision/flair? Good passing?
Now I have an idea of the key components of the core tactic.
Next step, is back to the squad list, still sorted by CA, and the 'next level' of players are looked at - now I know what my key players are like, I can work out how to get the rest of them working to support those top guys. So say one of my top players plays in the MC strata, has fantastic vision, passing, flair etc - I want a player who can win the ball and give it to him. So i am thinking now along the lines of combinations and partnerships.
This exercise should fill out all 11 spaces on the tactics pitch, you will have arrived at a formation, as well as an idea in your mind of how to approach the base tactic which should get the best out of this group of players. You will also have a pretty good idea on where your strengths and weaknesses are, so you can set scouts assignments at this point to find the players you want to fill the gaps.
I am now in a position where I want to play a friendly - which brings me to the next question:
Pre Game : Do you change formation/team instructions depending on the opponent?
Yes, a little.
Having been through the above process, I will play a couple of friendlies without any TIs or PIs or OIs to see how the unit works, on default. Watching full-game or Comprehensive highlights., I will add one or two instructions here or there to see a: if it improves the tactic, b: what it does to a particular player in a particular role. Or how it affects my midfield/defensive line/width etc. I will play at least three friendlies against stronger opposition, three against similar-ranked opposition and three against easier opposition - using the same approach to tweak instructions etc so I see how we defend, how we fair in 'even' matches, and how well we can attack/break down the stubborn parked buses. (Xtra Tip: Make the easier friendlies the last ones you play, a few wins before season start boosts morale)
So entering the season, I will have an idea of how to defend, how to attack and how to be 'cautious'. Early in a save, without the history to draw on, I will go pretty much on the scout reports and analysis, media prediction, team reputation and pre-match odds to decide how I approach a given fixture - do I set up quite defensive/cautious? Do I go more aggressive and attacking? From the earlier preparation I will have a good idea on how to set up the tactic to suit the players on the pitch.
So by the first game of the first season, I will have at least one formation with attacking, holding and defensive instructions attached. (One tactic slot, three sets of instructions saved). I usually end up with two depending on the team and expectations - so for example a 4141 for more cautious, counter-type approaches, and a 4123 for more control/attacking approaches (can usually switch between the two without needing subs) one can be tight and compact one can be more wide and 'flowing'.
By Christmas in the first season I will have developed a third tactic/formation, or at least have a much better idea of one - this third tactic slot might just be used for a formation/tactic that trains the squad in the attributes I want improved, and may rarely be used in a match.
So, we have looked at the scout reports, the analysis, and decided how we set up for the next game.
During the game : I watch it on extended highlights, but i never know when to perhaps change team instructions/listen to assistant manager etc. Am i best judging how i see best or what i think best?
Early in the save at least, I would recommend watching as much as possible of the game, either full-match or Comprehensive, the action the game selects as highlights might be the ONLY time a particular combination worked - there could be 10 other examples that you don't see in shorter views.
Start the game, watch the first 15-20 mins or so looking at specific areas of the pitch - are we controlling the areas we thought we would? Are we stopping their key players well enough? Are we creating space and chances the way we planned? If we are, then leave it as is - maybe shout encouragement. If we are not, why not? Are we getting enough of the ball? Are we being overrun in midfield? Is my striker being left too isolated?
Again, a few tweaks here and there may be all that is needed - adjust a players duty, or the whole team mentality, add/remove one or two instructions as I see fit. The AssMan's advice can sometimes identify something I have missed, but I don't always follow it unless I agree with it, it can point you to an area that needs looking at but nothing more.
Maybe I need to switch from my initial tactic to a more defensive one - so from 4123 back to 4141 perhaps, or vice versa. All depends on what I am seeing happen on the pitch. My player ratings and opposition player ratings are a good indicator - if they have a player who is getting a good rating, I need to look at why and work out how to contain him, if one of my players is getting a good rating, I need to work out why, and look at how to exploit him.
20 - 30 mins of a game is plenty to see how any adjustments have worked the way you wanted, if not, small adjustments here and there. If it ain't broke, don't try to fix it. Last ten minutes might call for a more extreme tactical change depending on the match - go all-out Overload to scrape something, or tighten up and park the bus to protect. (I do wish the Waste Time instruction was available in higher mentalities than Defensive). I may just slow things down if I am in control/ahead, lower tempo, shorter passing, more fluid - or speed it up - higher tempo, dribble less more structured.
I am not a great follower of the 'one tactic for home, one tactic for away' approach - football is too 'fluid' for that. Being able to adjust as and when needed can be key as long as you don't get caught up trying to put fires out all the time, the discipline for us the manager to just let things play out for a while before making changes can be hard.
There you go - if you have time to read all of that - well done!
I hope you get something out of it.