BuddyPress.org

Regarding init (I copied this off a WP documentation blog, but explains what I want to say!):

init is an action that is fired after everything in WP has been loaded, but before wp() has been run.

So you’re right! In this case, because we want to override the wp hook, we’re using init to ensure that our function overrides BP’s one.

For the second question, you could put the second add_action in the function and test it out. Like I said, the above code I posted was untested!

Reason I left it out of the function was to ensure that our new settings nav function does indeed run, but in theory, it should work inside the override_bp_core_settings_nav() function as well (I think!).