The ability is optional. You can decide to allow it to deal combat damage as normal.

The ability allows you to deal damage during the declare blockers step of combat, which is well before even first strike creatures deal damage.

It can target any creature on the battlefield, not just one of the ones blocking it.

If placed on a Laccolith creature, both this card’s ability and the Laccolith’s ability will trigger and have their effect.

The ability triggers even if a spell or ability makes it blocked, instead of being blocked by a creature.

If this is on an opponent’s creature, the controller of this card (not the creature’s controller) decides whether to use this card’s ability or not, and decides what the target will be.

Moving the enchantment after the ability triggers will not affect which creatures are affected.