Actual FOV, means the horizontal FOV based on your resolution or ratio, so the most used and most straight forward way of expressing your field of view.
So for example CSGO uses a "horizontal FOV 4:3 Ratio based" which means that your actual FOV on a 4:3 ratio display is 90°
But when you use a wideview display like 1920*1080p or 16:9 ratio your actual FOV is not 90° like on a 4:3 ratio display but 106.26° because you are using a wider display. So the game still states that your FOV is 90° because the calculation it uses is based on a 4:3 display ratio but in fact your actual FOV is 106.26° because if you convert 4:3 ratio to 16:9 ratio you gain 16.26° in field of view because of the wider display.
That solves the first question.
Next up: the monitor distance.
It's quite easy, if you want to synchronize your mouse movement with your crosshair movement meaning that in every game it moves the same amount of distance you should use monitor distance.
For example: In CSGO my actual FOV is 106.26 on a 16:9 ratio display and my sensitivity is 1.38 using a DPI of 1000 meaning that if i move my mouse 1 inch my crosshair moves 2.1 inches. and my 360 turn is 11.85 inches
If i want to synchronize this with overwatch which has a maximum actual FOV of 103° i need to use monitor distance since i cannot synchronize the FOV's so in that case my sensitivity is 4.39 for overwatch but my 360 turn is 12.49 inch instead of the 11.85 inch from CSGO because i use a different FOV in overwatch than in CSGO
If you want to match your 360 turn you can but then the mouse/crosshair movement will deviate between the two games. So when you cannot match your FOV like when using scopes and ADS it's wise to use monitor distance since it synchronizes mouse/crosshair movement between different FOV's.
Got it?