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This is for a complete new window install. Not a replacement window which is very different. A new window should not fit real tight in the opening. You should have at 3/4″ of an inch cap on all sides. This space is great for adding insulation.
No matter what type of window you’re installing you should always use a square on all four corners. Now no house is really framed 100% straight. To where windows should be installed straight and level.
You would use nails with a large head, roofing nails work great for this. Don’t skimp on these. Make sure you nail at least every four inches making sure that the nailing flange is tight against the plywood. Any caps here will allow the outside air to come right into the house.