If it says I am better than 71.4 % of players, is that only players who have played in the last week, or is that all of lichess?
Tried searching and Didn't find it.
Yes, once you have not played for a certain amount of time your rating is sort of paused and no longer considered in the rating pool until which time you make your return in which case you start where you left off.
Also if all ratings over time were included it would only improve your ratings overall because ratings inflate over time.