Activity Level vs Step Counter Deduction

Pretty hard to say really, I don't know if MFP treats your amount of steps differently depending on the activity level you set. I could definitely imagine 10000 steps adding to your calories if you tell MFP you're mostly a couch potato (as 10k steps would be a very active day), but deducting from your calories if you tell it you're very active (since it'd be a slow day for you). Then again, there's definitely plenty of activity that wouldn't add to your step count, so that might not necessarily be the case.

I guess the only thing to do is try it out - if your weight loss/gain is off from what it should be based on the calories you're eating, MFP's estimate of what you use is off. And you should watch for this anyway, since calorie estimates based on the data MFP has are likely to be off anyway, even if only due to differences in base metabolic rate between different people.

Whatever you do, the bottom line is if you lose less weight or gain more than you should, eat less. If you lose more weight or gain less than you should, eat more. MFP's estimate can be customised as needed, and should really be treated as just that - an estimate. It takes some trial and error to get it right for your personal needs.