It works best if stuff dosen't touch, but it doesn't preclude drying stuff out. If your goodies are touching, you'll have to move them around every couple of hours to expose the touching bits to the airflow. It's just simpler and less work to keep everything separated and in one layer.
As for veggies, most anything can go in there. I usually save myself some trouble and buy frozen veggies, defrost them and then dehydrate. The notable exception is potato, which seems to come out pretty darn insipid. I've dried cabbage, carrots, peas, bags of mixed vegetables, apples, bananas, tomatoes, tomato sauce, bags of frozen fruit, pineapple slices, and more.