I didn’t have a particular dish in mind, just that recipe direction, which I’ve seen frequently. I defer to the more experienced cooks of Indian food for recommendations.
Toasted/fried/roasted Dals in small quantities add both Flavor and Texture. They do soften as time passes assuming there is Liquid involved.
Tempering is frying Aromatics (Spices, Dal, Chilis, Garlic) in Oil or Ghee that is added to the dish. It is also called a Tadka, Bagari or Chownk
You can use a small fry pan or saucepan or anything else. You only need a separate pot if it’s a final tempering — otherwise just do it in the cooking pot.
Yesterday my family came in to the kitchen to prepare snacks just as I was frying the spices for another batch of tomato chutney . I thought I had it down, and didn’t have everything set up, and I forgot the dried chilies! I fried them in a separate pan, and added them while frying the tomatoes…then realized I’d also forgotten the tumeric. .