Can anyone explain how G-sync is meant to be used?

I got a 165Hz G-Sync monitor but honestly have no idea how to properly set it up:

1. Should I turn on both g-sync & v-sync in game? Or just one or the other?
2. Should I cap the FPS at 165 Hz, or any multiple of said refresh rate? Or leave it unlimited?
3. Often times I am unable to attain 165 FPS in graphic-intensive games; does this mean that I should lower my refresh rate in my monitor’s settings to better match the FPS i’m actually able to achieve?

Thanks in advance!