The Lambert-Conformal projection is best for mid-latitudes. Polar-stereographic projections are best for high-latitudes and poles, and Mercator is best for low-latitudes.
Explanation
The ungrib program will always process GRIB1 data, and as long as you compiled with an option that was not listed as 'NO GRIB2' then it will also process GRIB2 data. The program does not process observational data, and since it reads the &share section of the namelist, it will only process the dates/times listed in that section.
The metgrid program takes the meteorological data processed by ungrib and interpolates it to the WRF domain. The program will also "copy" static geographical data processed by geogrid to the output. Vertical interpolation is not performed until the real.exe program.
It is important for a Vtable to give GRIB codes for each source of meteorological field required by WRF. The WRF model does not usually need all the data in a GRIB file, but must have certain fields, and uses the Vtable to extract that data from the GRIB files. Each type of data uses different GRIB codes, and therefore there is a different Vtable written for each source type.
The metgrid program reads the &share section of the namelist, which includes the start and end dates.
The wrf.exe program must have both initial and boundary conditions in order to run, for a real-data case.
One of the primary functions of the real program is to take the horizontally-interpolated meteorological fields from WPS (met_em* files) and vertically interpolate them to WRF model levels (which are based on a terrain-following coordinate), prior to running wrf.exe.
The suggested time step used for WRF runs is 6xDX; however, it may sometimes be necessary to reduce it to 4xDX to maintain stability in the model in real-data applications.
You can find the value for 'NUM_METGRID_LEVELS' by issuing the command: ncdump -h met_em.d01.nc and looking for that variable and its corresponding value.