Customizing %excerpt%

In settings, we see this explanation next to %excerpt%: The Post-Excerpt (default 400 Chars).

Does this imply that we can use a different number of characters, and if so, how is accomplished? I would like the excerpt to be less than 400 characters.

Also, is there any way to include the first paragraph only, regardless of how many characters it is? This would allow me to create the post as a teaser to read more.