You have the option to create a key, but you have to use words from a specific list of allowed words to make a valid key.
You don't. You can create a seed phrase out of any words you like. It is simply that the BIP39 standard which most wallets use has a fixed word list, but this is by no means the only way to create a seed phrase.
Each blockchain has its own set of words that are allowed.
I don't care at all for shitcoins, but BIP39 is used across the vast majority of coins and therefore they will all share the same wordlist.
If your good at crossword puzzles like scrabble, then you might come up with a word that with it you can get 23 words out of it
This is just manually creating a seed phrase but with extra steps. It is a poor source of entropy.