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Note: the XP awards listed in the log for monster kills and quest rewards etc are the share awards each qualifying character receives - so for most folks 1/6th the total XP earned. To convert the XP numbers you normally see in the log for a four char party with the option turned on multiply by six and divide by four.
Obviously the trade off is that all characters left at base will get no XP at all (where as with this option off they get their 1/6th share as well, in the party or not) but I guess you already knew that.
EDIT: I mean if you have shared xp on yes everyone will get xp.
It's true for all difficulty settings. The sole purpose of this setting is so that under-sized parties, and especially solo runs, level up much faster which makes them more viable.
And just plowing through with a suboptimal party for a stronger party later on?
Mounts don't eat up xp.
The animal companions level up in lock-step with there masters at all times. They don't count as far as shares go. So if you got a four char party with the party only XP option on and one of them has got an an animal companion it will get exactly the same XP as it's master gets, i.e. 1/4 share as opposed the standard 1/6th.
I'm not sure I understand your question 100%.
Certainly, if you do not turn on the "party XP only" option then all the companions you have so far recruited will get their 1/6th share XP awards regardless of how many there are or whether they are currently in the party or not (or have ever been actively in the party so far).
If what you mean by the second sentence is that you can leave companions who will turn out to be very strong later game, such as Nenio and Daemon on the bench for the early game, using instead hybrid characters such as Woljif, Camellia and Ember, who being jack-of-all-trades types arguably don't get so powerful later, then yes you certainly can, with impunity. They will get exactly the same XP.
That's what I'm doing with the Grey Garrison assault at the moment. My view at the moment is that the "three witches" are, at L5, stronger than Nenio and Daemon. But I expect that to change fairly dramatically as the game progresses and Nenio and Daemon's spell books expand.