Hey Ryan,

1st class usually offers more comfy seats and sometimes also some extra stuff like free drink or small snacks etc. If 1st class isn’t available, then of course you can use the 2nd class with your pass.
In Austria and some other countries you will also get access to lounges (at specific stations, not all stations have a lounge) where you can go before or after your trip and also enjoy free snacks & drinks.

Best city to start from is relative… if you wanna travel from West to the East, Porto is definitely an OK starting point, just international connections are limited. I think there are 2 trains per day to Spain from Porto. In Spain there are unfortunately also no nighttrains anymore, so you only might be able to catch a nighttrain from French side on. French nighttrains are without sleepers AFAIK, but they have couchette (you share it with some other people). 

For using a nighttrain you’ll have to buy a reservation. For some you may buy it online/via Planner app, for some other you might have to do it at the station.

There are very few real sleeper trains left-though there is a kind of mini-revival. NOT any in PT-ES. The network of such trains connect Austria/Germany with around and are called NightJet-you can get a small discount (about 15-20 eur) on trips made with these-it may be cheaper -and easier to book, to not use passdays for that but simply book yourself a normal ticket and hope+pray for some bargain offers. Lounges for 1st cl are limited to Uk and Austria-there also in DE+germany, but not allow with INTernational passes, only real tickets from DB=german rails.

For young people-apparently even too young to post for themselves? 2nd cl is just fine. Perhaps less as 10% of all passengers in a country pay more to use 1st.

@mcadv  It´s no discount on Nightjet these are fixed prices for the reservations:) 14€for a seat and up to 150€ for private deluxe single sleeper. a good overview of Reservation fee´s you can expect for Nighttrains