everything is fair-use because everything is based on another person’s copyrighted material.
Of course not. There is a large amount of works in public domain.
And fictional characters, those that fan fiction typically uses, come about with the understanding that characters can be separated from the original works they were embodied in.
Copyright protects form, not content.
It protects the fictional characters themselves. If you make an oil painting of Harry Potter, it's still a copyright violation.