Great Question - and very complicated. Here's some of my experiences and practices. Last name is definitely the hardest.
First name: I enter formal names as the primary where obvious nicknames were in the record. I enter the nickname as alternative, and if used during adult life, as the "also known as".
I use "also known as" once and only once for a person. That entry is entered in quotes in your register reports, as a middle name. Extra "aka's" are superflous and are better entered as alternative.
If the person used two first names in their lifetime, I will usually put one as first, middle, then the reverse as alternative first, middle.
As for spelling variations, I post all recorded names as alternative and evaluate which variation was predominantly used.
I will often use two sources that I have created:
... Spelling variation
... Composite name from various sources
First, be aware that many times middle initials in records for married women was not their middle initial, but the initial of their maiden name.
I have found middle initials found in records wrong so many times that I usually don't use middle initials until I have two records that agree; or I can see the original record and there can be no mistake - especially with M vs W, L vs S, F vs T,etc - which are often very hard to distinguish in older spencerian writing in capital letters.
This is the hardest and most frustrating for me; and I have a have a rather simple name with only 4 regular variations: Hallock, Halleck, Hallick, and Halluck.
I usually don't switch from the spelling in that branch until I can tell the children of a family have continued the variation started by a father. For example, I may have someone in the fourth generation of Hallocks. He used Hallock, Halleck and Hallick indiscriminately during his lifteime in 6 records. - Or the writers of those records devised that spelling variation and the family person had nothing to do with the spelling. The frustrating thing is when one child and his children seem to use the Halleck spelling; but the others use Hallock.
This is made more frustrating because FTM doesn't allow us to assign an "index" type name to use for all descendants of a commmon ancestor - in addition to name as the primary name for reports and then alternatives for all of the alternatives.
This is a real problem for me. I pity the poor folks with Eastern European ancestors who could have a dozen spelling variations. How does one remember which spelling to look up a person in an index if you don't remember which of a dozen spelling variations you have as primary? It can be frustrating.
When FTM introduced their Places Workplace, with a structure that includes a "lookup" for current names and which maps locations - the obvious pressure to make use of these tools is to use the current place name. But, the place of record, and/or historical name are most important for accuracy and to leave a trail to others following you just where that person and event happened - and where the record can be found.
Some people, including me, use two place entries for the event/fact - one current, one historical or place of record. Or, you could use Anytown, was Smithtown, Montana, USA.