You do have to redirect the user to log in directly with the LE. That model ensures that third-party apps don't have access to the user names and passwords of LE users and instead relies on the
id\key authentication model that our platform is built around.
In regards to authentication longevity, the user tokens that get generated when the user logs in to the LMS are long-lived - days, weeks or indefinite depending on how your LE is configured. So an individual call will expire, but the user context will still be valid and can be used to generate and sign subsequent calls. We offer SDKs that streamline the auth process.
In regards to permissions, the rule of thumb is that the API always respects the permissions of the calling user. So if your LE doesn't allow a student to take an action, then the API will not allow that action either. In regards to the gradebook, if the student completes a gradeable item, the result is sent to the gradebook. But the API will not allow a student account to modify a gradebook outside of that context if the LE permissions don't allow it.