You asked about dinner times. We have always preferred second seating as it gave us more time to get ready for dinner
I agree with this. I prefer late seating for dinner (typically 8/8:30 pm) because it feels less rushed. I like going to the early show before dinner and whatever the adult entertainment is after dinner. Watching "Match Your Mate" is my favorite after dinner adult event.
I love the Magic and I'm sure you'll have an amazing time. My favorite sea day activities are trivia, watching movies, and reading near Cove Cafe. I'm guessing the weather won't be super warm, so pack layers.
Is there a "formal night"? If so, it doesn't actually have to be formal. Go with whatever feels comfortable for you and your family. My friend was embarrassed that she forgot to pack her formal wear on one trip, but the crew assured her that it didn't matter. I don't like bringing fancy clothes and shoes that I'm only going to wear for a couple hours, so my "formal" go-to is a black cotton dress with sparkly flats and jewelry.
Since it's your first
Disney cruise and it's only 3 nights, I'd advise against making dinner reservations for Palo because then you'd miss one of the restaurants in the rotation. If you want to dine at Palo, try for brunch if it's available. Typically this should be pre booked as early as possible, but there might be open times when you embark. The folks at Guest Services can tell you what's available.
If you're interested in trying any alcohol tastings, those should be booked in advance asap too, assuming they're still being offered. The tend to fill up quick. I'm sure there are lists from past cruises of things that people were able to book in advance, but who knows what might change from the Before Times.