The biggest do is to follow the manufacturer's instructions.
I can't immediately locate any sort of instruction sheet for this particular antenna, but given that using it is slightly more involved than just connecting it to your radio's antenna connector, something like that should be included with it. (You could also just contact your local Nagoya reseller and ask.)
With collapsible antennas, you need to take care to not break it; the joints between sections present a breakage risk that is not present in antennas that have a fixed physical length. Fixed length antennas can be made as basically a flexible piece of wire; retractable antennas need to be much more rigid to support their own weight, particularly in odd orientations which are common with HT operating. In many cases this can make a full-length, fixed-length flexible antenna a better choice than a collapsible, rigid antenna because the former is better able to handle the moderate abuse portable antennas often are put through.
- "More antenna" (fully extended) is rarely a problem when receiving. The sweet spot for feedpoint impedance is an odd number of quarter wave lengths (1/4, 3/4, 5/4, ...) assuming a reasonable ground plane; the physical length that this corresponds to depends on the specific construction of the antenna.
- "Less antenna" (collapsed) should not be a significant problem when receiving. At worst, the received signal strength will be reduced vis-a-vis a larger antenna.
- Antenna length is much more critical when transmitting because the impedance matching becomes more important.
It doesn't really matter very much if the antenna/radio impedance mismatch causes 99% of the signal received by the antenna to be reflected back into the antenna rather than being transferred to the radio (your received signal strength would be 20 dB down, which isn't great but probably not that much worse than most rubber duck antennas), but it matters a whole lot if 99% of the signal transmitted by the radio is reflected back into the radio (that's 4.95 W out of 5 W, going in a direction it doesn't belong)!
- Shortened antennas are always a compromise. 1/4 wavelength with a good ground plane is almost always the best you can strive for mounted on a HT. However, if a shortened antenna gives good enough results for you (as in, you are able to hear everyone you want to hear, and can raise everyone you need to and/or hear), then you won't magically be getting more use out of your radio when getting a better antenna. In really extreme situations, it could raise your noise floor, making picking out stations more difficult.
A more efficient antenna may allow you to operate using a lower power output setting (as in, you might be able to work the same stations with good results on 500 mW as with 5 W into the rubber duck antenna), which will help conserve some battery power. However, due to the transmission duty cycle commonly being very low in amateur radio, this isn't going to make a very big difference; I would expect a few percent longer operating time out of being able to reduce transmitter power by 10 dB, at best. In other words, this should not be your deciding factor.