Estimating Volume of Work for Product Backlog Items

Hello, 

I recently gave my PSM 1 exam and I recall reading that the Development Team estimates the volume of work for each Product Backlog item. With regard to this, I have two questions:

This is how my understanding goes - During Pre-sprint the Product Owner gathers requirements from the Customer and puts them into the Product Backlog in the form of User Stories. The User Stories are ordered based on a factor deemed appropriate by the Product Owner. The team need not wait till the Product Backlog is 100 percent complete (Product Backlog is never complete - it is dynamic, continuously changing and improving), to begin a Sprint. They could begin the Sprint as soon as the Product Backlog is mature enough with the initial stories. 

During Sprint Planning, the Development Team estimates the capacity of work they could do in the Sprint in "Points". They select a couple of items from the top of the Product Backlog (as the top most items will be of higher priority and more detailed). After selecting the items for the Sprint, the Development Team would next estimate the volume of work for each item

          Question 1 - What would they do if the total volume of work for the selected items exceeds their initial capacity of work for the Sprint? Would they replace some of the selected items with some other items from the Product Backlog; or would they change their initially estimated capacity of work for the Sprint to suit the total volume of work for the selected items?

          Question 2 - Are there any free resources that teach how to "estimate volume of work in terms of points"? I am asking this because if I were a Scrum Master, I am likely to get a question from the Development Team on how they are supposed to determine the points for an item... 

Thanks.