Why some materials don't preview on rendered mode in RH6?

I’m interested now in understanding this better and have questions.

When I right-click the ‘M’ (Material) input of Custom Preview, the “Set one material” option is disabled unless I have defined materials in the Rhino file. So in Rhino, I define a material corresponding (and assigned to) each layer where I intend to bake the parts and set that material on each of the custom preview components in GH. Later, if I open the GH file without also opening the Rhino file where I created the materials, “Set one material” is disabled but all modes of the rendered preview still look correct? How/why does that work?
Q1: Are the materials assigned to Custom Preview components saved in the GH file?

Q2: This thread (above) and others show a text panel connected to the ‘M’ (Material) input of Custom Preview but that fails for me, every possible which way, whether or not the Rhino file has the material defined, giving a rather nasty error message:

material_error1

It doesn’t matter whether or not geometry is supplied:

material_error2

How is the ‘M’ input supposed to be used?