As you rightly point out in your question, Canopus star trackers are pretty nifty instruments. I don't think it's really possible to do them justice in a single post, so I'll include a few summarizing points here and will include links to other articles, etc. for more information.
1. How do they work?
NASA Technical Report 32-1559 does an excellent job of ...
This is how it worked for the Space Shuttle, it was fairly autonomous.
To perform insertion, orbit, and deorbit maneuvers, there must be
accurate data for the orbiter's location and velocity with respect to
the Earth for use by guidance and control. This is the task of the
shuttle navigation software. The navigation software maintains
an accurate estimate ...