Everyone can talk and listen to everyone, provided they can set the same freq.
This freq is simply saved as "channels" to facilitate operation.
There are some with 8 or 10 or 40 channels depending on the manufacturer/ model.
If the 40 is on a channel (i.e. freq) that yours is not, you will not hear each other.
The 40 must then be set to one of the 8 channels of your model, then it works again.
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AM or FM the difference is in the transmitting power;
Since a few years, FM or SSB can transmit 4 watts and AM 1 watt on 40 channels (in Switzerland).
If you have a device that can do both, you can set FM with more transmitting power. You will then transmit with 4 watts.
However, you may have poorer sound and the battery will run out. Everything has advantages and disadvantages.
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These simple handheld radios usually have 0.5 watts of transmitting power, which of course reduces the range even more.
Add to that a short antenna and you have a range of 0.5 to 5 km. (The 10 km described here are an illusion).
This is also dependent on the weather (e.g. humidity), just as concrete or houses massively reduce it in the city.
I use this one to work indoors. It's enough for that. It would also be OK on the ski slope.