>
> Do I stop this process again before proceeding?

yes

What determines the port number?

this is the port given by webfaction when you create a custom app
you should go to applications and to select
App category: custom
App type:* Custom app(listening on port)

In this configuration the socket refers to the localhost.  Why?

in front of clients apps (servers) there is a webfaction nginx instance and
it redirects all requests to localhost:your_port_number

 So how does the communication process between uwsgi and nginx takes place
> in this setup?

actually it is built in uwsgi http server,
but as I said there is a webfaction nginx instance that redirects requests
to your server
 -p 1 * 64Mb will eat maximum 64 Mb of memory
 -p 2 * 64Mb  - 128 Mb

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