You can see my attempt to explain this here, including pointers to some earlier more authoritative threads.
My main correction to your writeup is that thinning is based on age of versions, not date of a policy change, and not in a sequence. Ages start at 0 and can be given in any order, but early-to-late is easier on humans. Because it’s age, local versus UTC doesn’t enter in, and likely leap years don’t (internal time is continuous).
Originally 1W:1D didn’t do anything special at 1W, forcing one to set retention days as well. Now it implicitly deletes. If you want deleted files to hang around longer, you can put it in the retention string, even using :U however such a change obviously won’t bring back any version deleted according to some previous setting.
allow-full-removal refers to filesets, but this is also known as a version. Basically a point-in-time view of files.
If I got that wrong, maybe someone will correct me. It’s confusing. 