For your first question: When you first get a Talent, it initially adds 3 more dice to your roll when doing a Test where your Talent would come to play, but increasing it would add an extra die to that bonus. For instance, if you have an Agility of 4 and your Agility Talent is "Tightrope Walking", you'd roll 7 dice when using a tightrope. When you increase your "Tightrope Walking" Talent's level, you'd now roll 8 dice when using a tightrope, because "Tightrope Walking" was increased by 1, and so on.
For using Talents in Combat: You're correct in that "using" the Brawn Talent would simply add more dice to your Brawn in Melee Combat, and the Agility Talent would add more dice to your Agility in Ranged Combat, provided that the Talent is relevant to what weapon you're using or what situation you're in. For instance, if you have a Brawn of 3 and have a "Swordfighting" Brawn Talent of 3, you'd roll 6 dice when attacking with a sword, plus any bonus dice from the type of sword used.
A Talent can also be "used" to substitute the normal Attribute used in whichever kind of combat that you're currently engaged in for one of your other Attributes that has a relevant Talent, provided that you can:
- A: Be creative
- B: Have the Garden & Grave Master deem that it either makes sense or that it would be funny to use that Talent in that context.
For instance, if you have a Brawn of 3, but also have an Agility of 5 plus a "Breakdancing" Agility Talent of 4, instead of fighting normally by using your pathetic 3 Brawn dice in Melee Combat, you can instead decide to fight your enemies via breakdancing, taking your 5 Agility Dice plus your 4 Breakdancing dice to roll 9 dice when in Melee Combat.
Hope this helps.