1) Always have a plan. Whether targeting a weak square, trapping a piece, or checkmate, your moves should further your goal unless when necessarily countering your opponent's moves, in which case sometimes you can do both at once.
Also, attempt to constrict your opponent's moves so that he has little useful things to do.
2) If it gives you an advantage. Trading a useless bishop for an active knight - good job! Vice versa - what were you thinking?
3) That depends. Often the threat of a tactic (or mate) is more potent than the actual tactic. Threatening back rank mate or a knight fork can sometimes force your opponent to make major concessions.
How do you play the midgame? I know that this is a very vague question, but here are more specific questions:
1. What specific things do you think about and focus on?
2. How do you tell if it is better to simplify?
3. I can find some tactics, but how do you set up tactics and avoid tactics your opponent is trying to set up?
Thank you in advance for your help.