If I'm continuously tracking a subject using the 3D tracking setting, can anyone tell me where does the camera lock its focus on the subject? Is it the eyes, is it the closes subject part to the camera?
Actually, 3D tracking operates in conjunction with Color Matrix Metering - so it's a combination of both subject movement and pattern recognition; especially skin tones. 3D tracking helps to tell the Autofocus system if the subject is moving closer or further by recognizing a distinct color pattern within the frame and determining if it's growing larger (getting closer) or smaller (getting further away). That's just one example. The variety of patterns housed within the camera's database and how close your situation maps to one of those patterns is a good determination of how effective it will be.
In the case of the eye or eyes, the subject's face would have to fill the frame of the AF sensor array (as seen in the viewfinder), in order to recognize that as the distinct feature. If the face does not fill the frame, it could use the face/neck area, especially if the subject was wearing clothing that made the skin tone stand out.
Edited to add: the AF system will not necessarily track with the first area it locked on to. There's been tons of posts on this since the release of the CAM3500 AF system, so I won't rehash in detail here. Suffice it to say that the combination of the selected AF Area toggle switch and the Servo switch that heavily influence what initial sensor is used to calculate focus, and whether or not that initial sensor remains the point of interest or if the camera has latitude to pick another sensor. By using 3D Tracking, you're also telling the camera it can (again dependent upon AF area and servo choices) have full reign to move to any of the 51 points (in conjunction with 3D calculation) in the array if it needed to.
Setting release vs focus priority depends on what you find more important for the shooting you are doing, which is why they made it an option in the first place. Selecting release priority means the camera will shoot whenever you press the shutter release. Selecting focus priority means that you may get some delays and/or the camera might not shoot when you expect it to.
Set release priority if getting the exact moment is more important to you than getting more in-focus pictures. The default is for the camera to use release priority for AF-C and focus priority for AF-S.
For shooting any kind of action, I use AF-C with the default release priority. I tried focus priority when I first got a D300 and missed too many peaks in the action because the camera delayed for focus, even if the current focus distance would have been good enough given the subject, distance and aperture in use.