Yes, the blue lever is prop control Its purpose is analogous tp 'overdrive' in an automobile. No, one does not want it at maximum speed all the time -- only during takeoff.
A constant speed prop could be referred to to as a variable-pitch prop because that's what it is. There's a good description of what it is and how it works
HERE.
Maximum RPM is referred to as 'fine setting' which means the prop blade angles are not set too steep and thus are able keep their r.p.m. s up.
Once climb speed and attitude is achieved, the power and prop are 'pulled back'. Power is pulled back first in realworld but in sim planes it doesn't matter.
Prop/Power settings for various flight configurations are to be found in the Operator's Manual or in kneeboard Reference file in MSFS.
bill
P.S. Using CTRL+F1 will set the prop to maximum-range (course) pitch setting