APY means yearly interest for your coin that staked in the network. Staking is a good idea but you must have known about all of the risks. When you're staking and you must try to stake on the platform that will not lock your token and did vested for your reward.
How much you can earn from your staking totally depend on how much APY that already offered by the staking platform. More APY and you will get more token as the reward for your staking activities.
Let's say you will get 120% APY and when you're doing staking for a month and you will be earning 12%, 6 months you will be earning 60%. When you are fully staking your amount for a year and you will earn 120%
I agree that as long as you have your tokens and not willing to sell for some time then staking is a great option to earn while holding your coin/s.
Yes, the APY depends on the number of people that stake on the platform, so the more people to share the rewards the lower the APY per person becomes. As for the period of staking, there isn't a particular timeframe that's better over the other as this depends on you, but usually the longer you stake for the higher the APY because you take a higher risk by technically locking your coins away for longer.