In sparring, you should keep your punch technique as close as possible to the technique you will employ in an actual bout, as per the truism "You fight how you train".
Keep it simple. Don't introduce anything new which will confuse you or create too great a difference between your sparring and fighting technique. To reduce power, simply 'pull' your punch a little so that, rather than punching through the target, you tap it, withdrawing your fist immediately upon impact. You can practice this easily on a heavy bag.
You can also lessen the force of your punches by increasing the range from which you strike; so that punching through your opponent becomes far less likely, if not impossible. This is an inferior practice to pulling your punches in my opinion, because again, you fight how you train, and you don't want to train yourself to gauge range incorrectly.
You're right. If you never train to hit an object hard, the chances are that you will not hit with sufficient force during a fight. This is partly why there are different intensities of sparring. As you work up to a fight, the intensity should occasionally become higher, to both condition you to greater impact and speed, and to allow you to punch with more authentic force. This is of course not without its dangers, especially Chronic Traumatic Encephalopathy (CTE). You to consider how far you want to take full contact training, because there's no getting around it; to train/practice as full contact fighter is to invite brain damage.
As for not keeping a proper fist during sparring, I have never heard such advice, and my immediate reaction is that it is poor advice. Whilst a sparring session is ideally more controlled than a fight, it inevitably involves unintentional clashes and excessive contact, including contact with elbows and even your opponent's fists. If you experience this contact without a safely formed fist, you will increase the chance of wrist/hand injury, including fractures. Catching your fingers is a possibility, but most decent gloves prevent against finger extension via the inclusion of a gauntlet between thumb and fingers.
A good way to become accustomed to full contact in relative safety is via body sparring sessions, where the head is off limits, but full power is allowed (you can also permit light contact to the head in such sessions, but it can prove surprisingly difficult - and therefore dangerous - to switch between light and heavy strikes within a single combination. Heavy head contact may occur inadvertently).