1
The Recovery partition in your screenshot is the small default WIndows recovery partition, it is not a PC manufacturers partition that would let you perform a PC manufacturers Factory Reset.
If there is a problem with Windows, you can access the Windows Recovery environment and form in there, you will have many options, including uninstalling the latest update, performing a System Restore, accessing Safe Mode and a Windows Reset, which is basically like re-installing WIndows with the option to keep your files or deleting them.
2
With regards to which is best, creating a Recovery USB or a bootable Windows USN, the Recovery USb is device specific and contains system files to allow you to access recovery options, but not to clean install WIndows, if you create a bootable WIndows USB using the Media Creation Tool on the MIcrosoft website, that will contain many recovery options, but can also be used to clean install WIndows on your PC, so that would be the best option.