One: What is the deal with dialogue formatting? I sometimes see dialogue inside of a paragraph, and sometimes on a separate line. Is there a rule to follow here or what? I tried finding a pattern to it in some short stories I've read but they seem to just do whatever they feel like. I have books on the subject but they always focus on how to write dialogue creatively, never technically.
You should always take a new sentence every time someone new speaks but there's no exact place within the sentence that it needs to be (say the start or end), so,
"This is speech," he said.
is equally as valid as
He said, "This is speech."
Or you can do both.
"This is speech," he said. "As is this".
But when you add a second character, it should always be,
"This is speech," he said.
She said, "And this is dialogue."
Note that commas should precede or follow dialogue tags (said, replied, shouted). However, if an action follows the speech, it should be accompanied by a period.
"This is speech," he said as he sat in the chair.
"And this..." She took the seat beside him before continuing. "...is dialogue."
If the speech is particularly long, like something you'd hear from John Galt, the speech should be separated into paragraphs based on subject and topic as you normally would.
The book I found best for a lot of this kind of stuff was 'Self-Editing for Fiction Writers' by Renni Browne and Dave King.
Two: I get that this is a real stupid question but what's your take on details? For example in my current piece, a short story, two characters are walking home together. How much details are too much on their surroundings and they themselves. I've read some expert advice on this, such as leaving the MC kind of open to make it easier for the reader to self-insert, but I never seem to find any decent advice on when I'm getting too much into detail. I get that this is largely a personal matter and the important aspect is for the text to flow, but I assume there has to be some pointers?
Enough to give context, but nothing irrelevant. So, if it's a winter's day you can mention the cold, or details about how they can see their breath when they talk, if it's still early maybe there's still some frost in the grass, you can mention whether they're wearing heavy clothing or shivering, because it builds the immediate world in which they're walking home. Diverging into a tangent about how this winter is colder than the last three winters and how climate change is ruining the world would be too much.
But it's not a hard and fast rule, because, as you say, it's largely personal preference, and there are a lot of authors who have had tremendous success despite their tendencies to over indulge in the details. Some readers love it, some readers will be put off, at the end of the day it's largely about how much you think is enough depending on what you're trying to convey with the story. Short stories do tend to need to be more concise that novels though, when you need to be a lot stricter about word count.