Hi,
if the 500MB are split into several videos of 20MB max, then yes, all the videos will be downloaded in background without the user to know it. We've talked several times of improving this and add download icons too, I opened an issue for this:
https://tracker.moodle.org/browse/MOBILE-1612
About youtube/vimeo videos, they should work fine in the app. I checked with your user and I'm able to play a vimeo video. But please notice that these videos won't be downloaded for offline usage since they're external pages/players.
About the internal links problem, I think it could be related with having an old version of the Moodle Mobile Additional Features plugin. Can you please upgrade the plugin to the latest version for Moodle 3.0?
Kind regards,
Dani