Rules 1 and 2 are how you actually organize notes. Instead of thinking about categories or tags, you just have interconnected notes. You use those connections to find the notes you need. Eventually, out of those connections, organic groupings of notes start to emerge, which is pretty neat.
Rule 3 really is the only important one, though. Ultimately it's all about getting your thoughts in order.
You'd habitually link to the same notes a lot. Those hub-like notes would fill the role of categories or tags, and would be functionally identical, except you wouldn't be paralysed by deciding what to name them or how to define criteria for inclusion in a category.
Exactly. It helps avoid decision paralysis and bikeshedding. And eventually once those hub notes become well-defined, it would be easier to shift to a more serious system.
Rule 3 really is the only important one, though. Ultimately it's all about getting your thoughts in order.