the format is just the file extension. Z3D is the format that is specific to Zmodeler. 3DS is another 3D file format. I dont recommend using 3DS because it usually (or always, not sure) doesn't save the "normals" which are directions that control the way light reflects on the model, meaning they have weird shadows. But the old Zmodeler 1.07b can import .3DS files so there's that.
The format used by Zmodeler 1.07b and Zmodeler 2.# are both "Z3D" but they are a bit different (Zmodeler 1.07b can't open the newer Z3D format but Zmodeler 2 can be used to export into the old Z3D format so that Zmodeler 1.07b can open it). I still know very little about everything related to 3D models and formats though.
Well, when you open Zmodeler you should see 4 views by default: front, side, top and 3D. You can use them to manipulate the polygons (faces) or vertices of the model. I suggest you start with Zmodeler 1.07 b because it's more straightforward and user friendly.
Anyway, keep reading that zmodeler tutorial that I already posted, it explains all the basics. I think it teaches everything you need and it's as simple as it gets.http://www.zmodeler2.com/docs/program/fulltutor/getstart.html
When it comes to these mods though it's usually about getting a model from the internet or from another game, using some program to turn them into a format that works in the Zmodeler you use (in my case I usually get the models in .obj format, use Zmodeler 2 to convert them to the old Z3D, then open them in Zmodeler 1.07b) and then resize, rotate, separate, move, rename, etc. the parts of the model until they match what Underground uses. And as an example you use the car model that comes with the Underground 2 mod tools.