Index of questions here...
Would it record all add, update and delete activities made by a user?
Yes, it records all these 3 activities and additionally will also records when a user logs in or logs out.
Can we control on what modules we want to record activities?
Yes, from the admin panel locate "Activity Monitor Settings" and set on which modules you want to record activities.
How to disable login and logout activities being recorded?
If you dont want to log login/logout activities go to Activity Monitor Settings and de-select Users module.