The game files (.scd) aswell as the FAF mod files (.nx2.UI mods don't affect other players (directly), as example notify is messaging them about your upgrade, but it's not altering their game Sim mods affect everybody and usually alter the gameplay, so as example PhantomX and any balancemod is a sim mod. Mods usually have a hook folder (usually /hook, can be configured to have another path in the mod_info) which contains all files that the user is hooking to (overwriting or adding code).
Notepad++ or Sublime do fine, a full IDE like IntelliJ with a LUA plugin is fine aswell
This is a page for you to get a basic idea of modding FA.
Supreme Commander is extensible by mods, which can alter the whole gameplay (like PhantomX for example), change the balance of units, display information to the user or make the user automatically do things like renaming units or send messages to his allies when he starts upgrading.
