There are a lot of questions here so I'll take a stab and try to answer a few. But before I start I should let you know, it seems you took a lot of these configs from guides or other people. They are all so heavily modified that it is difficult for me to help troubleshoot. Nginx is a highly capable and thus complicated piece of software. For specific nginx config questions, I would recommend asking the folks who wrote the specific configs you're using.
First of all, I don't quite understand why you came up with such a confusing domain name forwarding structure. To me it seems all you needed was to use your main domain for business, and set A records for certain subdomains that point to your home server. If you're already using cloudflare for managing those dns records, I'm sure your ddwrt router can update those subdomains on cloudflare with ip changes. You shouldn't need to use the freedns ddns as an intermediate.
In letsencrypt, you can do one of two things, 1) set the url as mydomain.com, set the subdomains as matt,matt2,matt3 and set only_subdomains to true. That way it won't try to validate mydomain.com but you can add as many subdomains as you want, or 2) set the url to matt.mydomain.com and set subdomains to 1,2,3 and you'll get a cert that covers 1.matt.mydomain.com etc.
With regards to multiple site configs, it's up to you. Nginx simply combines them all into one giant config file through include statements in nginx.conf and other sub-confs. The only rule is, there has to be one named default, otherwise the container will create one. You likely had issues due to duplicate servers or locations.
If you want your server to only respond to certain requests, play with the server name. Keep in mind that you can define a default server name for each port, so if nginx gets a request with an unrecognized destination address, it will send it to the default server. So you can create a separate server block as a catch all by defining it as the default and make it do whatever you want, serve a 404, redirect to Google, etc.