I think the main point for the last question was for you to recognise that the derivative function is a decreasing one for x > 0, and the linear approximation assumes that the gradient is constant (hence the reason it's called linear approximation, straights lines have a constant gradient), and does not account for the fact that the gradient of f(x) is always decreasing for x > 0.
I'm not too sure about the h value being too big though, it's appropriate to account for inaccuracy of the approximation, but doesn't tell us why the approximation is greater, which is what the question asked. You may or may not get the mark.
Also, for the inverse function question:
"Many students did not give the domain. It is important that students realise that a function consists of two parts – the
domain and the rule."
This is a quote from VCAA 07 paper 2, where the question asked for the inverse function
You often get questions which just ask for the rule, which is why in that case you don't have to put the domain. A rule is different than a function. As VCAA said, a function consists of a rule AND a domain, so forgetting to put the domain will definitely cost a mark