I use carbon in a reactor 24/7/365 and have for over 30 years. It's job is to remove toxins (copper, other heavy metals, medications)and DOC's (dissolved organic compounds). The DOC's are where the yellowing of the water comes from.
Although you can use carbon in a mesh bag, it's effectiveness is greatly affected. You will be much better served using a reactor. I have both TLF150's and BRS single reactors in use. Both have their + and -.
GFO is short for Granular Ferric Oxide. It's only real purpose is the removal of excess phosphates from the water, and should only be used if (when) testing or excess algae growth demonstrates that there is a problem. Because all living organisms require some small amount of PO4, the goal is not to reach 0.00 PO4, but rater somewhere in the 0.03 range.