Vertical panel siding joints are always shiplapped and must fall on a stud. Sealant can be used if it is carefully applied to the lap. There should always be an underlayment behind the siding that laps over the z flashing at the horizontal joints. Don't expect plywood panel siding to be the equal of horizontal siding or other cladding materials placed over underlayment and sheathing in terms of long-term weather resistance. A water-borne acrylic latex primer should be fine unless the surface of the plywood is rough or damaged in which case it might be better to use a solvent-based, oil-modified primer (commonly referred to as alkyd or oil-based).

If there is a vapor barrier under the T1-11, that would be the case. A better reason is that the T1-11 should not be touching the concrete at all---for the same reason. Moisture damage to the wood from the moisture in the concrete. Current building codes specify only pressure treated wood should be in contact with concrete. The ant problem would not be cured by sealing the T1-11 anyways---it is almost impossible to seal them little critters out. We use bait hotels and I spray the trails with Deep Woods Off---lasts a long time and is not as dangerous to pets/grandkids as poisons.

Repair patch width will depend on the framing spacing--usually 16" between the center of one stud to the center of the next stud The problem with trying to replace a patch section is the gap that will be left. Replacing an entire 4' by 8' piece eliminates that gap. Caulking vertical joints is not usually necessary---the built in half lap joint is designed to make a fairly tight seal. Always prime any wood before painting. I generally use a primer that costs more than the paint---I like Sherwin Williams, Glidden, and Pratt and Lambert. Hardi siding will generally last longer than wood siding and need less maintenance. You can get Hardie siding in 4' by 8' sheets as well as the lap siding designs. Very seldom a good idea to simply install new siding over old. If the old is rotten/deteriorating, covering it will only hide the problem and it will still continue---eventually affecting the new siding job. I like T1-11---which is simply the term for that design---there are other designs of sheet siding.

Cut the bottom edge of the sheets to a 30 degree angle, and keep it 1/4" above the flashing. Most important!: prime the bottom edge, and up a foot on the back side. Use oil primer. Maybe even go so far as to pre-paint the bottom edge before installing. This detail will keep the water dripping off the plywood, and prevent it becoming waterlogged. Casey