Rimon

Looks integration into Windows 11 context menu is not very good...
 
Without integration

 
With integration enabled
 

Microsoft has already fixed it. The fix should be already in the Insider Preview builds of Windows 11.

Unlike LiveGrid, LiveGuard submits suspicious files for analysis in a cloud sandbox. Until a verdict is returned, proactive protection blocks execution of the file. In case the file turns out to be malicious, it will be blocked permanently.
While LiveGrid also submits suspicious files, it doesn't block submitted undetected files and execution is allowed. Also a detection for submitted files may be added with a delay of dozens of minutes.
You can activate a 30-day trial version of ESET Smart Security Premium and try it out yourself.

No, enabling only the LG reputation system will not submit files, only hashes of files.

Only if there are some files cached that were evaluated as suitable for submission when the LiveGrid reputation system was enabled.
You can submit suspicious files in an archive encrypted with the password "infected" to samples[at]eset.com
Note that disabling the LiveGrid Feedback system also disables some protection / detection routines in other protection modules, such as the Ransomware shield.