- Does it monitor all the activities that software and applications make?
As far as I'm aware the only activity it monitors is to ensure you are virus free.
- Does it collect or record any information or data when monitoring?
Again only that to assist you or avast to ensure the program is working correctly, you can also adjust the level of this monitoring.
However, I don't believe there is any monitoring for unethical purposes otherwise the spyware hounds would certainly sniffed it out.