Mathematically, VMG is the vector component of your boat speed that is directly into the wind.

Velocity Made Good = Boat Speed * cos(True Wind Angle relative to your boats direction of travel)

VMG should not be mixed up with shifts and other stuff, it is just a measure of how fast you are sailing upwind or downwind. The words "upwind" and "downwind" are critical to understand, marks of the course are not important to VMG calculation, shifts are not important to VMG calculations.

1. VMG shouldn't be related to fixed points, it isn't necessary and only confuses the issue. Boatspeed and playing the shifts are both important. 99% of the time you should be sailing as fast as possible, ie. max VMG.

2. That is what VMG is useful for, it ignores windshifts.

It is interesting that generally with cats that have tacking angles higher than 90 degrees, you have to sail away from the mark you are trying to make when getting close to the layline.

Try drawing a diagram, it makes understanding VMG much easier.