For your first question, the "out" and "BPI-M3_Android_HDMI_V2.img.dump" are not simple files, they are folders. It's just doing a copy of everything that is in the folder "out/" into the folder "BPI-M3_Android_HDMI_V2.img.dump/". It may replace some files, but it's fine because you need them to be replaced anyway.
For your second question, it means "change the current directory to "BPI-M3_Android_HDMI_V2.img.dump/", then replace the file named "config.fex" by the file "sys_config.bin". (or copy over).
Regarding the use of the GPS, it may be useful to edit the sys_config if your module outputs its data via a serial link, because you'll be able to use the UART 2 and 3 (but for the uart 0, you have to edit the bootloader command line, which may not be possible with this android image without recompiling).
To be able to open the serial port in a program not ran via adb (via the launcher for exemple), you may also need to add/change the permissions of the /dev/ttySx (0777), somewhere in an uevent*.d* file if the sources were available, but maybe there's a file you can change somewhere to do the same thing, I don't know.