I don't quite understand the references to hand luggage only, is that an airline restriction or my decision
Bit of both. Some of the very cheap airlines offer a headline fare that looks very cheap but all you get for that is to take a rucksack and sit where they decide.
So unless you can get everything you need for the trip in the small bag, which is possible for a short break but most people will start to struggle at around 2-3 days or more and there are endless discussions on the internet about how to avoid paying extra for luggage.
But if you do need more allowance, it's worth understanding the charges as with two people, it might be cheaper to take one large hold bag between you, than for both of you to pay for a larger cabin bag each. Also, if you don't travel often, you might prefer to work with what bags you have already, rather than needing to go out and buy new (although there's now a huge market in cheap airline compliant bags or you could always borrow from a friend/family member).
Some people prefer not to check in their luggage as they fear loss/theft/damage or waiting to collect it at the carousel. I don't mind, as it saves dragging it around the airport, having to unpack at security (most UK airports don't need this any more, but many European ones do) and fight for a space in the overhead locker.
It's a bit of a battle of wills between you and their airline - they also offer a confusing array of packaged seats/luggage/priority boarding which mainly serve to hide how much each element costs separately so you end up paying more than you need to.
But seeing as you're going from London City, I'm guessing you're going on BA, which likely means they're above most of that nonsense, but in short, you still need to find out if there are any size or weight restrictions on luggage as turning up at the airport with a bag that is too big or too heavy will lead to extra charges. You also need to understand what can and can't go in hand or hold luggage - liquids, battery powered items like phone etc, anything sharp, look on the airport/airline website for details.
I'm a bit gobsmacked to hear you have to pay extra for seats if you've already paid for the flight! Surely that can't be right
Probably not the case with BA but at the lowest level, Ryanair will deliberately separate people on the same booking unless you pay to sit together, I've never experienced this with Easyjet or Jet2, we never pay for seats and DP and I have always been given seats together. Plus some people prefer aisles or window seats.
On food, when flying out from the UK, my preference is a Boots meal deal bought after security, rather than buying something on the plane, which is expensive, poor quality and sometimes they run out of a lot of options or take ages to serve you, so no good if you get on the plane hungry.
Have a wonderful time, if your DP has flown recently, he'll answer your questions about what you're unsure about. I love Malta and have been many times, mostly for scuba diving, but also for sightseeing etc. Your DP is right about the sockets. Once we spent ages searching the house for our adaptor plugs only to get there to find UK style sockets, which we knew about as it wasn't the first time we'd been.