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in the workspace deps.edn, will polylith still work properly if I use :deps not :extra-deps , to capture all my development dependencies ?
You should only put configuration for the development project in the :dev alias. What's in the root :deps is ignored.
which deps.edn' end up getting called directly with clj -M/A/X/etc in any context , is it the workspace one and the project ones?
If you e.g. execute clojure -M:poly from the workspace root (to start a poly shell) then the :poly alias from ./deps.edn will be used. If you put other stuff in your projects/PROJECT/deps.edn files, then you need to be in respective projects/PROJECT directory (`PROJECT` is just a placeholder here for your project name).