You have a third choice, mentioned briefly above by rharv: a hardware MIDI synth. Just be aware that your Focusrite is a good sound card but does not provide sound for MIDI. I have some Focusrite equipment, and I use Roland hardware synths for MIDI.

#1, with a really good hardware or software MIDI synth, you can get sounds comparable to the quality of the RealTracks, maybe better. In addition, you have complete control over the individual MIDI sounds in a way that RealTracks cannot match.

That leads the the second part of the question: they are produced in a totally different way. MIDI is a set of instructions to a software or hardware synth; MIDI has no sound of its own. RealTracks are snippets of audio recordings by actual (great) musicians, under control of BIAB. They couldn't be any more different in origin.

#2, this is a very subjective question. I know I hate the way all MIDI sounds on horns, because I play horns. Similarly, a MIDI guitar might sound OK to me, but perhaps would not sound OK to a guitarist. You will get all kinds of opinions, but if you can narrow down your selection to a few choices you might buy, then I suspect you could get better opinions from us users.

BIAB 2024 Win Audiophile. Software: Studio One 6.5 Pro, Swam horns, Acoustica-7, Notion 6; Win 11 Home. Hardware: Intel i9, 32 Gb; Roland Integra-7, Presonus Studio 192, Presonus Faderport 8, Royer 121, Adam Sub8 & Neumann 120 monitors