Depending on the budget, I’d always test a few audiences in your campaign (LALs, Interests) splitting by prospecting/remarketing & excluding to minimise overlap. Turning on CBO will let FB determine as set level budget and help you understand how the audiences perform comparably.

I wouldn’t segment by city unless there’s any real business need. Broader audiences are generally better.

Do you mean objective? This would depend on what your primary KPI is and the tracking capabilities you have.