UE has not yet capable of creating character from scratch or rig meshes features. You can do simple models or edit your meshes in UE. You can use external 3d programs such as blender and maya to create and rig your character or models.
To make characters, you need a 3d modeling software, which allows you to edit by lines/edges, vertex / points, faces / polygons, and then of course it (the mesh) needs to be rigged and textured / material zones. Blender, 3ds Max, Maya, Modo, Silo (abandonware at this point), Hexagon, etc…
Yes, of course. Existing 3D applications like 3ds Max/Maya/Blender are very well developed and the only reason to make modeling tools within Unreal is for convenience so it’s not a high priority. Basic modeling functions are in there but that’s mostly for blocking out levels with simple geometry. Anything that’s complex is better suited to be made in one of those other programs.
I assume you mean the default player mannequin? Yes, I think it too would have had to been made and rigged somewhere, outside of UE4. Think of it like the right tool for the job…UE4 is a game engine editor, you export 3d models (preferable as FBX it seems) to UE4 from those programs I mentioned or other 3d modeling software.
UE does have basic things like cubes and things, I guess theoretically with enough time you could build something extravagant but it would probably be like trying to build a castle with gravels.