Yes, $a$ and $b$ are sets; they are subsets of $X$. The expression “$f(a)$” is an abuse of notation; in this question it means the set of values that are obtained by applying $f$ to some element of the set $a$. That is, $f(a)$ is being used as a shorthand for $\{ f(x) \mid x\in a\}$, which in turn is a standard shorthand for $\{ y \mid \exists x\in a. y=f(x)\}$.
The function $f$ is not given. However, there is a general property that holds for any function $f$, which relates $f(a\cap b)$ to $f(a)$ and $f(b)$. Your task is to discover this general property which is true of every function $f$.
Suppose someone told you to prove, or disprove that $$f(a\cap b) = f(a)\cap f(b)$$ for every function $f$ and every subsets $a$ and $b$ of the domain of $f$. Would you be able to proceed to prove or disprove that? That is part of what you need to do here, to resolve item 2.
Then proceed with the other three items.