Yeah its fun, sometimes type 2 fun though (miserable at the time, fun in retrospect )
The figure they use if you haven't done an FTP test is based on the best 20 minute power you have done in the game during general riding. It's a good starting place. For the races then the first 3 to 4 minutes are hardest, it does settle down a bit and then will get hard again going up the climbs. For races then there are a couple of different setups - one where every category starts at once and the results are given by category at the finish, and the second one where each category is separate and starts at minute intervals. The separate starts make for more fun racing because the riders around about are the ones you are racing against plus it means the starts are a little less crazy.
Most of the races are mixed male and female, which can prove a bit unfair on the flat courses because guys will generally be heavier and 3 watts/kg for a 100kg rider is going to be alot more watts than for someone that is 30 or 40kg lighter - but on the hilly courses this levels out a lot more. There are some women's only races - the British Cycling series has some (plus has staggered starts so is probably a good place to start) and the Tour of Watopia has some too. There are a few other women's only series, and also some of the mixed races have a women's category too.