I have been focusing on the ending of the verb to tell who is doing the action. Here it is "he reads us a book" because lit is the il form, not the nous form (so you know "he" is doing the action, not "us"). I'm still figuring this stuff out myself, but I find I'm less confused by the order of the words if I just focus on the verb. At that point, the rest falls into place. I suppose this wouldn't work where the verb ending would be the same for both subject and object, which suggests to me there is probably a better way to figure out subject versus object in a French sentence. If I am wrong please correct me, and I hope I do not lead anyone astray!
No, It is not optional. And we do not pronounce the 't' in 'lit' because it is followed by 'u'. This is for every verb conjugation ending with 't' when the succeeding word is beginning with 'u'. Hope I cleared your doubt.
Sorry, I don't agree.
"Il lit_un livre" has an optional liaison and it is welcome.
Please read the point 6. here: https://www.lawlessfrench.com/pronunciation/optional-liaisons/