Hello there, thanks for your questions!
Alrighty, lets start with (1):
Thats a tough one, and one that we have worked on significantly. We currently have several combat mechanics in place to even the playing field, where large fleets dont scale as well as specialized smaller fleets in certain combat scenarios.
Another one is a small governance malus on innate planet defenses / production the larger your empire grows ( who wants to work hard if you are on planet #49, Moon 7 of the empire?
).
We are also working on a NPC Faction that would balance things out, but havent quite finished the design phase of this yet.
This would actually make a good medium post writeup with more detail, which I will link in here later.
Regarding (2), its seamless. Alliances should be easy to build, and bit harder to leave. Currently the only requirement is owning a spaceport to create one. To leave it, there is a minimum cooldown of 3 days before you can rejoin ( to prevent turncoats).
About (3/4), the benefits are logistical and social in nature. You could move your ships to your alliance members planets to launch quicker raids. You could hoard your resources on a different planet than your own if you are getting focussed. Protecting one another with assistance, gifting resources, all of that is possible with Alliances. Our gitbook page about alliances is due for a refresh, thanks for pointing that out!
About (5), Diplomacy will have its own wiki-page & medium blog post, since its a bit more in-depth.
To condense it a bit, the diplomacy feature enables players to create binding contracts for resources and military with one another. You could demand resources from a player while offering peace for a month in exchange, or agree to a ceasefire for a week. Its supposed to give the gameplay another layer of strategy, and therefore requires a bit more explanation.
I hope that answered your questions a but, we are also still working on updating our documentation as we implement those features right now. Cheers!