Can I combine effects?

Yes. Enable multiple effects on the same component. Use Master Setup only if you need to change global effect order.

Can I animate effects?

Yes. Use Unity Animation clips or change public fields from scripts.

Should every sprite have its own material?

No. Use shared settings when possible. Use per-object settings only where needed.

Which variant should I try first?

Use Standard for normal SpriteRenderers, GUI for UI Images, and 2D Lit URP only when using URP 2D lights.