So how do Terrain/Clime affect the central Colony Sector? Should I have all my colonizers settle on junk sectors?
The colony sector doesn't get exploitations and doesn't produce resources that way but it can still be relevant. For example if the colony sector has a forest it will still provide +10 production via the Ecological Construction doctrine. It's also nice to settle in sectors with Cosmite nodes so you can start getting the Cosmite immediately instead of having to wait for the node's sector to be annexed.
I have a Colony in which I already have 2 food sectors. I just added my 3rd sector to that colony, and it wont let me choose food. Is there any way to exploit more than 2 food sectors per colony?
You can only have up to two of each land based exploitations but you can add a "third" via aquatic sectors. 2 energy exploitations + aquatic sector with Hydro Battery = massive energy income. Same with food and research.