SSH Authentication with Private Keys

I think that I've managed to get Coda to authenticate with the EC2 private key. Can someone please verify that what I did makes sense.

1. I created a new file: ~/.ssh/config
2. I added the following to the config file:
   Host myserver
   HostName 1.2.3.4
   User root
   IdentityFile /Users/username/keys/myserver.key
3. In CODA I created a "site" and for the server supplied "myserver". The Hostname, User, and Indentity File are passed by the config file

I'm brand new to Amazon EC2, and in the introductory video, the default server settings were already configured.

And so it took me a while to find these instructions, which walk through setting up the default security group as following:

There's also a warning that says:

In this example, you enable any IP address to access ports 22 and 3389 of the instance. Although this might be acceptable for testing purposes, it is extremely unsafe for production environments. For production systems, you must obtain your public IP address ranges and grant access to those ranges only. For example, if your IP address is 103.55.22.234, you specify 103.55.22.234/32.

Does this mean that you should change the default group settings when you're ready to go live to production?
Or create a separate group with the specific settings?
Also, does this mean that we need to press the "Allocate New Address button to reserve an Elastic IP address" before we should go live as well?

Just curious how these security groups evolve over time.