Everyone probably does it a bit differently. Depending on the size of the cake their ordering I'll let them chose 2-3 flavors, I ask they only bring a couple people along to the tastings (mainly because the more people, more opinions, the harder it is to make a decision, etc.) if they want more flavors I'll charge an additional price per flavor (I had a bride once want to try almost all the flavors on my menu-which is a lot!)
Anyway, you can do mini cakes, cupcakes, slices of cake, really it's up to you. As long as its presented nicely I don't think it matters. I typically make their samples with different buttercreams and fillings on the side so they can mix and match. If they aren't familiar with fondant I'll cover a cupcake or small mini cake in fondant, it just depends on how busy I am. I have fresh coffee and water. Some cake dummy's set up so they can see sizes and looks in person as well as a fondant covered styrofoam cake slice, so they have an idea of the cake portions they'll be serving so they can order sizes accordingly. If the bride comes with her mother because the groom can't make it I'll send something home.
You can do whatever you want, bct prefers cake filling already put together so if I was her that's how I would do it. I just like things on the side because there are so many combos and I let them have different flavors for each tier. There's really no wrong way to do it