Good day @l pro ,
In order to discuss your specific case and save us the time to play the "guessing game" please remember ALWAYS to provide in each question:
1) Queries to CREATE your table(s) including indexes
2) Queries to INSERT sample data.
3) The desired result given the sample, as text or image of excel for example.
4) A short description of the business rules, and how you got 1-2 of the results
5) Which version of SQL Server you are using (this will help to fit the query to your version).
1) How do I convert this to a line geometry?
As explained above, we do not know what is "this"
but a simple solution for "CONVERT MULTIPOINT into LINESTRING" you can find in this demo on GitHub (scroll to the bottom).
2) Generalize the line. Reducing the amount of points by an algorithm e.g. Douglas Peucker with a variable tolerance = X meters... There are other algorithm' around.
This is actually build-in in SQL Server :-)
Check the this official document on how to use Reduce() method to simplify a LineString.
3) Convert lines which have exactly overlapping geometry to one line.
More information and clarifications on option including sample demo will help. In the meantime check this post which is related to this but not directly solve this specific need
My image explains exactly what the post is about :-)