I am not db guy. But I need to create tables and do CRUD operations on them. I get confused should I create the index on all columns by default or not? Here is my understanding
In the specific scenario you give, there is no WHERE clause, so a table scan is going to be used or the index scan will be used, but you're only dropping one column, so the performance might not be that different. In the second scenario, the index shouldn't be used, since it isn't covering and there is no WHERE clause. If there were a WHERE clause, the index could allow the filtering to reduce the number of rows which need to be looked up to get the missing column.
Oracle has a number of different tables, including heap or index organized tables.
If an index is covering, it is more likely to be used, especially when selective. But note that an index organized table is not better than a covering index on a heap when there are constraints in the WHERE clause and far fewer columns in the covering index than in the base table.
Creating indexes with more columns than are actually used only helps if they are more likely to make the index covering, but adding all the columns would be similar to an index organized table. Note that Oracle does not have the equivalent of SQL Server's INCLUDE (COLUMN) which can be used to make indexes more covering (it's effectively making an additional clustered index of only a subset of the columns - useful if you want an index to be unique but also add some data which you don't want to be considered in the uniqueness but helps to make it covering for more queries)
You need to look at your plans and then determine if indexes will help things. And then look at the plans afterwards to see if they made a difference.