Not necessarily. Something along the path from your Pi-hole to the final name server serving any domain you browse to. Pi-hole cannot find out which name server is responsible for the truncation. It doesn't have to be the first one on this path.
The limit is never surpassed for the vast majority of queries. Only those that trigger the warning are affected at all.
I'm not sure about this. There is something that affects your performance and you can fix it by appropriate configuration. Sounds logical to alert you that you should look at it. Once it is resolved, the earnings will not appear any longer.
In this case you should either use this value for the FTL setting or change both as advised by @jfb. This value is even lower than the 1280 I suggested above. We should update the documentation accordingly.
edit