Statement 1 (No): The definition.pbir file itself is not "in the PBIR-Legacy format"; it is a standard definition file used in the modern Power BI Project (PBIP) structure. "PBIR-Legacy" specifically refers to the report definition format (stored in report.json) that this file points to. While the "version": "1.0" property inside definition.pbir enforces that the associated report content uses the PBIR-Legacy format, the definition.pbir file is a distinct, modern artifact.
Statement 2 (No): The configuration uses "byPath", which indicates a relative local file system path (../Sales.Dataset) to a semantic model within the project folder. If the model were located in the Power BI Service, the file would use the "byConnection" property (referencing a connectionString and pbiServiceModelId).
Statement 3 (Yes): Since the report references a local semantic model (via byPath), Power BI Desktop loads the model definition from the local files. This opens the project in full edit mode, allowing the user to modify the data model, relationships, and DAX measures, unlike a live connection to a remote service.