What setting on a thermomix would create a simmer

Personally, I would argue that 2 and 3 are actually the same, and they are your answer.

If you heat a pan of water you'll notice the bubbles forming before the water is actually boiling, hence the talk of between not bubbling and full on roiling.

Also, when you're making your soup, it isn't pure water, so the boiling temp will not be a perfect 100 degrees C in any case.

So, I would say, that simmering is when you keep it just under a full boil. Watch what you're cooking, there should be gentle movement, but not a full roiling pan of whatever it is you're cooking.

To get something simmering away, you need to bring up to a full boil, then reduce the heat until you're getting movement, but not full bubbling.

The only thing that gets the connective tissue in tough cuts to loosen is heat. With the lid on, you've got more insulation. I'd bet you a shiny nickle that the meat towards the bottom of the pot was a touch more cooked than the meat at the top of the pot— you're losing a lot of heat where all of that liquid is hitting room-temperature air. With my immersion circulators, for example, I can't keep the water bath much above 70c without covering them, but the second I cover it, the temperature shoots right up. So sure, the lid likely made it cook a little more quickly and evenly. That said, allowing your cooking liquid to evaporate and intensify as you stew your meat can be a good thing too.