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Forts have three main uses:
1) A province with a fort gets double the resource production, and some of the resources from neighboring provinces (based on their administration value). So you can build a lot more there. You can also build any of your national troops in a fort*, otherwise you can only build the troops native to that province. National troops are usually, but not always, better than the native troops. However, building a fort doesn't prevent you from building the native troops, so, you aren't losing anything.
* Priests and sacred units also require a temple, and mages require a lab, to build.
2) A province with a fort has increased supplies, depending on the fort's Supply Storage value. Provinces near the fort also get increased supplies, but the effect decreases the farther from the fort they are.
3) Forts provide protection, it always takes at least one turn for your opponent to break down the gate, and often longer. During this time, they can't engage the troops you have in the fort in combat (this is especially valuable for priests preaching, mages forging or researching, etc). Some nasty random events (barbarian attacks, etc) are also mitigated by forts, as these raiders won't storm your castle; this can save the units you have in the province. Attackers also can't capture your lab or burn down your temple until they have captured your fort.

As far as where to put them, this is up to you, but generally, valuable provinces (with good magic sites, victory points, map chokepoints, enemy borders, high income, high resources, or whatever you need) are the right place for them.

Gems: The best way to get more gems is to send mages out searching for sites. Most magic sites produce gems. Some do other things instead. Each site has a difficulty (up to 4) and a path (air, fire, death, whatever). A mage whose skill in the path is equal to or greater than the site's difficulty will always find the site, otherwise they won't; there's no randomness. Sometimes you also get gems from random events.

Magic: You can script the spells your mages will cast by going to "army setup" and clicking by the mage where it says "<select orders>". But, to get good spells, you need to research. To set a mage to researching, he must be in a lab; "research" will be one of his available orders (click the bottom of his icon where it says "defend" or "move" or whatever). Press F5 to see your overall research status, and try right clicking on the names of the spell schools (evocation, conjuration, etc) in that screen. Some paths, like fire and earth, get lots of good battle spells. Other paths, like nature and blood, have lousy battle spells (but good rituals). Researching is slow and requires valuable mages, but you won't gain access to any worthwhile magic if you don't do it. Most of the good spells start to appear around level 4 or 5 in whatever magic school you are researching.

Prophet: It depends on your nation and strategy. For some nations, a stealthy prophet is useful, as he can sneak into enemy territory and spread your dominion there. For others, with powerful units, you can make your strongest unit your prophet and use him in battle, picking up significant combat bonuses in friendly dominion. Others want to make a level-3 priest their prophet, elevating him to level-4 and allowing him to cast the most powerful holy spells. It's just based on what you want your prophet to be able to do.

Blood Hunt: If you don't have blood mages in your nation, blood magic is rarely worth the effort. But yes, blood hunting is almost the only way to get blood slaves to cast your blood spells. Commanders that are not blood mages are terrible at blood hunting, and blood hunting is also difficult in provinces with unrest. Aside from blood hunting, the Fountain of Blood pretender gets a few blood slaves per turn, and occasionally you will get them from a random event. In multiplayer you might convince another player to send you some. But pretty much, blood hunting is it. Some nations (like Mictlan) have extremely good blood hunters, and others (like Pangaea) have some blood hunters, but they are very expensive for what you get.

Dominion: You normally suffer the penalties of enemy dominion, without gaining any of the benefits. You also lose morale, and of course sometimes the enemy dominion is just plain bad (like if your nation prefers heat but the enemy dominion is cold, or they are Ulm and have drain, or they are Ermor and have death, or whatever). Also, nations that get free spawning units (late Ermor, early & late Rlyeh, early Pangaea), don't get them in hostile dominion.

Armies vs. commanders: Armies have no impact on some things, and you should use lone commanders for this. In Dominions, "commander" doesn't mean "person leading troops" but rather "person you can give orders to." Scouts, mages, and priests rarely lead troops but all are commanders. Blood hunting, forging, site searching, casting rituals, spreading dominion, are all unaffected by armies. The only thing armies are good for is fighting and patrolling.

Pretender magic: There are three things you can do with magic on your pretender.
1) Blesses. If you have sacred troops, taking lots of magic on your pretender will allow you to bless them in combat with a priest, which gives them increased abilities for the rest of the battle. (better attack, better defense, regeneration, faster movement, whatever). Some nations, such as early Niefelheim, Helheim, and Vanheim, are extremely good at this because their sacred units are good. You get one bless effect at level 4 magic in a path, which improves with higher magic levels, and another, different effect at level 9 magic. The magic screen in pretender design tells you what your bless currently is.
2) Doing magic your nation can't normally do. Middle era Ulm, for instance, has only Fire and Earth magic on their normal mages. But they can benefit a lot from death and nature magic. So, in this case, you might take nature and death on your pretender to fill this gap. A special case of this is the "rainbow mage" - a pretender god with a very low path cost, such as an Arch Mage, who takes 3 or 4 levels in every path or almost every path. Such pretenders are exceptionally good at forging items and searching for magic sites. On the down side, this can be a lot of expensive magic, and these pretenders normally have other problems (like low starting dominion, and extreme physical weakness).
3) Doing magic your nation can normally do, but doing it better. If you look at the high research levels, you'll see lots of spells that require extremely strong magic. Many of these spells are beyond the ability of any national mage, and the only practical way to cast them is by using your pretender.