Why would one want one of these rather than a Storm Lighter?
The advantage of a ferro rod is that it is simple, reliable and lasts a long time. There are no moving parts to break or fuel to run out. They will gradually wear down but they last a very long time for their weight and you can see how much material is left. Even if one breaks the broken parts should still be usable.
Is one type or brand more effective than another?
I've used various brands and generic ones, they all seem pretty much the same to me.
Sizes are all over the map. Do these all work equally well? Is it just a matter of lifespan?
Pretty much, a larger one will last longer and is perhaps marginally easier to use but there isn't a lot in it. I find the larger sizes (around 100mm x 10mm diameter) easiest to use.
There are bare rods, rods on lanyards, and rods in handles. How does it matter?
A lanyard is useful to stop it getting lost as you can attach it to your equipment. Some people keep them in a loop on their knife sheath so handle and/or lanyard makes them easier to get in and out. With a bare rod you can also make a handle of the size, shape and material you prefer. Some knife makers make ferro rod handles to match a particular knife.
A plain rod though is easier to pack in a survival kit and the smaller ones take up less space than most lighters.
What is needed to make sparks with one of these rods? Will natural flint work as a striker?
You need something reasonably hard with a well defined edge, the spine of a knife is often used or a short length of hacksaw blade. Abrasive materials like sandpaper or rough rocks work too as will a sharp flake of flint. Files work extremely well. They are also soft enough that you can use the edge of a knife as striker with little risk of damaging it.
Do you "strike" or "scrape" a fire steel? How do you hold it?
Usually the best technique is to rest the end of the rod on your tinder and scrape downwards. If you are using an abrasive strike it may be easier to strike it like a match. But it's really a case of what is easiest for you. It take a bit of practice to get the best results but it is much easier than a flint and steel or friction methods.
As mentioned in the comment below the main aspect of proper technique is to strike/scrape it with enough force to produce good sparks without disturbing your tinder. My preferred method is to place a wad of tinder on a flat surface then trap it with the end of the rod and scrape down onto the tinder rather than holding it above the tinder and trying to aim the sparks.
In general you want to apply moderate pressure with the striker and use a fairly slow scraping movement.
Can you use less sensitive tinder than is needed for a fire drill or fire piston?
They generate quite a lot of reasonably hot sparks so they tend to light tinder more quickly and easily than friction methods or natural flint and steel and you can light most things which could be reasonably called 'tinder'. They can also light flammable liquids. With care you can also scrape off small shavings of the rod without igniting them which can help ignition.
They will usually light cotton wool at the first attempt and more difficult tinder like sawdust and paper are certainly achievable.
Are there any special precautions or specific failures for fire steels?
Not really, they don't like being soaked in water for long periods of time, but this is more an issue of long term storage than use. Obviously if you use a knife to strike them then basic cutting tool safety applies.