Ok I hear the word "Proceedurally" all the time to the point where I am starting to think it is being abused.
What do you mean? Do you mean that civs can pick from different types of government? Do you mean magical programming that makes up governments on the fly?
All procedurally means is that it's semi-random, based on an initial condition (worldgen seed, in this case), and generated using a specific set of rules. Using the same seed, you always end with the same result, but using a random seed means you end up with random, semi-predictable results.
So to answer your questions: Yes to all.
The rules could say that there's a chance that if a vampire wanders by, and they're surrounded by hostile civs, they could choose to instill the vampire as dictator. The seed and other factors of worldgen say if a vampire wanders by, and if they are surrounded by hostile civs, and the seed also says if they instill it or not.
Some seeds might say "yes, instill him" but don't offer a suitable vampire, or maybe there's a suitable vampire but the seed says they don't instill him. There could also be a suitable vampire, the civ is surrounded... but they opt not to take the dictator option.
With a random seed, it may as well be random, but the same seed will always gain the same result.
That's what he means by procedurally.