[2019] Commander of Darkness(Necromancer Ascendancy) Bug or Terrible Wording?

This is the correct interpretation. The reason the lines are worded differently is that "You and Allies affected by your Aura Skills..." defines a set of entities and applies a bonus to those entities. Regardless of how many auras you or your allies are affected by, you either are or aren't affected by your auras.

In contrast, "Auras from your Skills grant..." is making this bonus something that each aura from your skills grants in addition to it's regular effects. If you have 3 aura skills active, then each of them will grant that bonus to you or allies as part of it's effect - this will inherently stack with each other aura granting the same bonus, and because it's part of the auras effect, will be modified by any applciable aura effect modifiers.

The restriction to being affected is implicit in the aura granting the bonus - auras fundamentally work by granting bonuses to the things they affect (and not other things) - you need to be affected by an aura for it to grant you anything.

Yes, that's the exact reason - we didn't want those stats to be a downside with enemy-affecting auras like Pride or Curse Auras by making them buff enemies.

Generosity increases the damage mitigation in exchange for not affecting you

This is incorrect. The damage mitigation is the only part of the skill which does affect you (and it doesn't affect anything else) - removing it and increasing it at the same time would still be the same as just removing it.

Generosity only supports auras that affect both you and allies, and Flesh and Stone is not one of those, so is not supportable by it.

The gem description is incorrect due to overly simplifying things, and it's in the process of being revised. There are two separate parts to the Sand Stance of Flesh and Stone - an Aura, which only affects enemies and inflicts blind, and a buff, which affects you and grants less damage taken from enemies that aren't in the aura.