The correct phrases are:
And all that’s best of dark and bright Meet in her aspect and her eyes.
Where thoughts serenely sweet express, How pure, how dear their dwelling-place.
In opposition to the other phrases, these don´t refer to the subject´s beauty and its impact on others. They rather refer to the kindness and grace of the subject, depicting the way she behaves, her serenity and how dear she is to others.
What is the question it is not really clear in your statement
It describes the setting.
It establishes the Narrator.
It sets up the situation.
(:
1. Convey a lot of information quickly
2. Add layers of meaning to a text
3. Bring out specific feelings and emotions
Hope that helped :)