1. is it possible for them to see what is on my computer and vice versa?
IF you make sure your firewall is working then I would say your pretty safe from prying eyes
2. we have been retired for several years and have not kept up with a lot of the technology and i think that there are ways that bosses can "spy and/or keep track of" what sites the employees visit?
Yes,t that is done three ways . One: by software they put on their company's computers to track usage. Two: by monitoring what is flowing through the router. This is pretty high end stuff reserved normally for large corporations. Three: packet sniffing of wireless signals. If you see a car or van stopped near by with enough antennas to work for the CIA, knock on the door and ask if you can help by calling the police
People doing this are looking to steal transaction info. It is rare but it does happen normally in a large city with lots of open or unsecured wireless routers.
3. or is each computer totally anomyous and the time capsule machine is not capable of tracking my work and others that use the network?
The Time Capsule cannot track anything but who is on and for how long if your interested.
Would I worry if I let some cottage renter share services ? Nope do it all the time at the beach. Would I password secure ? Yup, keep it alive for those who you know or at least know who has the username and password.