The total space used by that data file should be 10GB no matter free or used. If suppose you have a data file with 5 GB data and 5 GB free space and you run alter database command to increase size it will flash error as size is going more than 10
I.E. as soon as the DB grows to 10GB does it stop taking transactions?
Yes it will if transaction is adding data, not if transaction is reading. Log file has no restriction of 10 GB
DB can grow to 10GB+ but as soon as used space hits 10GB it stops?
No, the total size will be considered. Your transaction will continue to insert data till data file is reached 10 GB. The error will be flashed if you try to run alter database command to increase file size more than 10 GB.
DB is 10GB max but only stops when used space also hits 10GB?
You need to understand that DB will grow till 10GB limit is used post that it will stop.