People will contact you and you will contact them. You can see on the map where they are. These days with e-mail there is no sense of obligation to reply to inquiries or offers, compared to when they arrived by paper mail, although of course it's nice to do so. Once you commit, though, you really, really shouldn't back out, even if you get a better offer. You can specify on the site which dates you are available for, but people don't always see/stick to those. So if your dream location comes up a week after you've committed to someone else who has bought non-refundable air tickets, the right answer is "Darn, we're booked for that period, how about next year?"
In terms of advance booking, I'd say around 2–3 months for a short-haul long weekend, 6–7 months ahead for a fortnight (when there was a paper catalogue it used to come out around Christmas time, which was ideal for a European summer holiday), and 18 months or more for a 6-week trip to Australia or the western US or other far-flung destination.
Regarding your commuter town, remember that most people with whom you will be swapping also live in commuter towns. You are not going to have an apartment overlooking St Mark's Square. What makes home exchanging work so well is that both families are in the same boat. A large house is a definite plus because a lot of swappers have 2 or 3 children, or might bring along an adult sibling who always wanted to visit Englandland, or whatever.