He would sacrifice his creature before damage is dealt. Your creature would only do damage to him if it had trample.
Yes, you choose the value of X. In this spells case, however, it has XX as a cost, so if X= 1, you would get 1 Angel and would pay a total of 4WW (2WW + 1 colorless for the first x and + 1 colorless for the second X). If you wanted 2 Angel tokens, X would equal 2, and you would pay 6WW, 3 Angels would be 8WW, ect.
And you can use anything as a token- beads, dice, Amiibos, whatever. The token cards are just an easy way to tell what is what.
No, Cycling is an ability that comes from your hand. Decree of Justice is one of the most complicated cyclers, here is a more simple one.
Cycling means that if the card is in your hand, you can (as an instant) pay the cycling cost, discard it from your hand, and draw a card. Decree has a trigger that occurs when it is cycled- you first pay 2W, discard the card, and then put the triggered ability on the stack. Then, you may pay X to create X 1/1 tokens, and then the cycling trigger resolves, and you draw your card.
Tokens, if they would be moved from the battlefield to any other zone (ie, your deck, hand, graveyard, library, command, exile), they are exiled (removed from the game). If an effect would kill a token, it goes to the graveyard just long enough to trigger anything involving a creature dying before being exiled. (example: you have an enchantment that says "When a creature you control dies, draw a card", a token being killed by a Lightning Bolt would trigger that enchantment, even though the token is exiled instead).
So in this case, if they bounce your token, it's exiled instead.
Apologies if the wrong place but we had a lot of fun for a few hours but just struggled with a few things, didn't even use the two planeswalker cards as we haven't read up on how to use them yet