On damage falloff: there is definitely damage falloff, but I'm not entirely sure how it works. The TF2 wiki has kinda a weird explanation
here, and from what I recall, a player model is about 70 units tall (in post edit: I just googled this, Source units are roughly equivalent to an inch), to give you a scale to understanding their numbers. The exception to the rule is critical rockets, which always do full damage no matter the distance.
If you turn on the option from the latest update that shows damage you deal, it becomes quite obvious there is damage falloff, as rockets that hit someone directly from across a map only do ~45 damage.
There are actually only a handful of weapons in the game that don't have some sort of damage falloff, according to the wiki, only the sniper rifle, huntsman, and flare gun (the last one makes no sense to me either). Even the flamethrower does a little less damage at the farthest distance you can lite someone from. Pipe bombs do less damage per bounce. And the 'crits do full damage' rule applies to every weapon I think.
