When you fold the binding over (either side) do you align the edge to:

4. or wherever it lands on the other side (the back).

How do you align if your seam in stitching binding on is not consistently even.

I use a walking foot for the whole process. My (Viking) foot has several snap on bases. I use the 1/4" to attach the binding. I've been sewing for over 50 years and I'm pretty consistent in attaching it to the front at a quarter inch. I use the SITD base to attach it from the front, again the front is very consistent both in stitching and in the width of the binding. If there is a discrepancy, it's on the back where the width might vary a bit, but it's always caught in the stitching. I would say the stitching is between 1/16" to 3/16" from the loose edge, but is usually around 1/8".

Several of the above comments said "I don't enter my quilts in competition so it is ok with me". What exactly do mean by this. Do you have a different standard of quality if the quilt is entered in a show and one made for charity.

While I admire and applaud those who enter quilts in competition or in shows, it's not my thing. I sometimes post them here or bring them as a show and tell to my quilt group, but other than that I don't do anything else. I make quilts for my home, as gifts, and for charity and use the same level of quality for each. Sometimes I make a quilt intending it for a gift and it winds up going to charity and vice versa.
If I were to make a quilt for competition, the only thing I would do differently is hand finish the binding, and only because I have read time and again that this is one of the areas that the judges look closely at.
Although I know that quilts have been made and used for hundreds of years with hand sewn binding and have lasted just fine, I think that machine sewn is stronger.