I have a few answers to your questions and will get the others as soon as possible.
The volatility is calculated by using the Garman-Klass volatility estimator. The detailed methodology is described in this paper.
The following equation is used to model slippage: intensity * volatility * (trade size / average daily trading volume) ^ power. We use the historical order book data to fit the intensity and power coefficients. The price slippage is proportional to the intensity coefficient and the power of the quantity traded.
The simulation doesn’t take the EIP-1559 gas price dynamics into account. Please see section C.4 in our Aave Market Risk Assessment for the details of network congestion modeling.