Those actually refer to two different disks. DreamCompute has virtual servers we call instances, and those have a disk provisioned for each one. Additionally, there is block storage, and as you've seen you can attach volumes to instances. That explains the two volumes, one is the instance, and the other is from your pool of block storage you have available.
Let me add, you probably don't need to mount block storage for anything. I say that based on your questions, and block storage is for relatively fancy server configuration. I run dozens of servers and can mount a network disk without reference, and I don't currently use block storage for anything.
Hey, you are using passwordless logins, and that is very cool! You got that part correct. And the usernames to login are by default the name of the OS, but you already know that because it is working as intended in your setup.
The image you used to create your instance was copied over to the disk for that instance. It is just a template, and as soon as you spin up a server it is its own disk image.
I know this sounds weird, but it is just how it got named. What you need to know right now is that when you log in to your server, you are logging into a single server instance, with your user. This is opposed to shared hosting, for instance, where you may have multiple accounts on one or more servers, but you can't really change anything on it except your web directory. "Cloud computing" is kinda hardcore that way.
That is the username of the account you are logging in as, and remember it is named after the OS. It will be slightly different in each different OS, but for Ubuntu instances, that user is in the sudoers list. That means it is an admin account, that can use
sudo. It isn't root, but it can be used as root in nearly every way most folks will ever need. Very cool!
DreamCompute is a generalized cloud hosting service. That means it is up to your imagination on what to do next. You asked about information for a lot of different subjects, and you will need to search for them on the web. Hardly anything is DreamHost/Compute specific, and I've found the DreamCompute docs cover most of what is needed on that side.
Learning Unix or GNU/Linux is super fun! There are many, many new user-friendly groups and resources online. I've been a member of SDF for over half my life, and have learned lots.