A bit on the plot first: If you look through the original game you'll see some hints of what was going on, though I don't recommend doing so so you can be somewhat surprised by things. However, the plotline has changed somewhat. I literally cannot say more than that, as I didn't know much about the original plot, and know almost nothing of the new one.
Now, as for the monstrous character bits...it's a suggested optional rule from the back of the Bestiary. The rule is not always balanced, so we may choose to reject some attempts with some of the choice possibilities. The lower the CR of the creature, the more likely it is to work properly. That said, I'm going to try to go through it below.
Taking an Erinyes as an example: An Erinyes is CR 8, and thus would count as an 8th level character to start. Once the party has gained 3 levels, the erinyes gets an additional level for free, which doesn't count against her level. This level is gained midway between 10th and 11th level. So she would, for example, be an Erinyes (8) Ranger (4) at 11th level. You can gain a number of extra levels this way equal to half the monster's CR, rounded down. So a Succubus could gain a maximum of 3 levels extra (7/2=3.5 or 3). But said Erinyes would gain her 2nd free level between 13 and 14, making her an Erinyes (8) Ranger (8) even though the ranger counts as Ranger 6. We simplify this by pretending that the Erinyes CR dropped. Now, as her next free level would come at level 16.5, just before 17th level, she hasn't gained the full benefits of this rule yet. The last free level would be gained at 19.5.
This means that the most levels the Erinyes could have at game start would be 10 levels of whichever class she chooses, looking like this: Erinyes (6) Ranger (10). Mind, the monster still retains all monster hit dice and gains feats based on the total hit dice, so she'd technically have 19 hit dice between Racial and Class Hit dice, and feats as appropriate for such.