How did the zones work with EtherTalk and TokenTalk, was it possible to define zones on non-LocalTalk hardware?
The zones are created ("seeded") by a router. Zones are definitely not restricted to LocalTalk. A single ethernet LAN running AppleTalk could have many zones, with devices logically grouped into zones even though they may be sharing one physical LAN. In the case of LocalTalk, a single LocalTalk segment could only be mapped to one zone. It's been a long time since I played with it, but I'm pretty sure each LocalTalk segment on a routed AppleTalk network needed a unique network seed address (basically a number from 1-65535 for ethernet, although some numbers may have been reserved - it's been 15 years since I did this stuff for a living!). Multiple physical LocalTalk network segments could share the same zone name - as long as the underlying network addresses were unique.
This meant that the zones were purely logical groupings (e.g. by department) and did not reflect the physical network layout. One department might have Macs, servers and printers in a mixture of Ethernet, Token Ring and LocalTalk networks, but the users were completely oblivious to this and the Chooser could see them all in one big happy zone.
LocalTalk was notorious for becoming slow and nasty if there were too many devices on a single network segment. Schools frequently created single LocalTalk networks with up to 25 computers connected (usually not terminated properly / poor quality wiring / cheap copies of the Farallon PhoneNet adapters etc), then wondered why the network didn't work. For businesses, it was considered desirable to have no more than four computers on a single LocalTalk segment. If this rule was followed, LocalTalk networks could hum along very nicely indeed.
There were a few devices around for connecting lots of little LocalTalk networks to an ethernet backbone. Compatible Systems made a 1 x ethernet to 2 x LocalTalk router called an "EtherRoute TCP". I have one of these connecting my Compact Macs and Mac Portable to ethernet
There was a similar device called a "Webster MultiGate" with had 4 x LocalTalk port + 1 x ethernet. The ethernet to LocalTalk routers were fantasic, because each LocalTalk segment effectively had its own dedicated channel to servers on ethernet and traffic on one LocalTalk network did not slow down any other network segments. [Edit] I should mention that another solution was to run the software router "Apple Internet Router" on a Mac II or similar and use both printer and modem ports to run separate LocalTalk LAN segments. I recall there were also some software products to do this in the background on AppleShare file servers. You could set up a Mac as a file server and connect 2 x LocalTalk network - one to the printer port and one to the modem port. Popular with schools for low cost. We generally avoided these solutions, because they tended to break (or the software would get fiddled with!) and would need fixing. A proper hardware router, configured properly would seldom return to haunt you at a later date.
A less elegant, but considerably cheaper and easier to configure solution was a device called a P-Shooter (not sure if the spelling of the name is correct). It was a dumb (i.e. not managed) device with many LocalTalk ports. The P-Shooter re-clocked and cleaned up the signals coming in from each LocalTalk port before broadcasting them to all the other ports - much like a 10Base-T ethernet hub. It did nothing for problems with traffic and saturated LocalTalk segments, but made a big difference to school networks without the expense or management overhead of a proper AppleTalk router.