Yep, the most of my flutes are from elder. I like it for several reasons, for example that it grows near here (although it grows better more south), it is easy to work with and it drops dead branches all the time so no need to cut living plants. I also use bamboo and make prototypes out of plastic sometimes. At times I also use mailing tubes, those made of paper, but they tend to have a bit more moisture problems than the rest. Some people also use glass or ceramics, some use concrete and bricks (no, really).
The holes there are just to give possibilities to break out of the harmonic structure. Without holes you can only play harmonic notes, but for example if you put a hole a minor third above the base note you get a little bit of minor scale feel to the flute. And just putting random holes and adjusting them to fit the nearest "nice" configuration gives you all kinds of interesting interval structures.
About staring to make your first one, I guess the important part is to just start trying. It is a bit easier to get the higher pitched flutes to speak but working with a fujara or any other low pitch flute is really rewarding, so I can't really say how you should start. I guess it depends a lot on the tools and materials you have available and also on your own mentality and what keeps you motivated. My first fipple flutes were about an arms length plastic ones. Anyway it takes some trying. There are many places that are highly sensitive in making a fipple flute or a whistle and in the beginning you will feel pretty much in the dark before you start to learn to connect the problem sound with the problem place. But then again I'm working intuitively most of the time and never make plans or measure angles and distances like I have seen some boring professionals do. I also often redefine problems into new features to avoid getting frustrated :)