Good questions!
Internally, Psi transforms any input file to an executable Python program, so you can read the file with Python syntax:
with open(filename_here) as f:
xyz = f.read()
from_string is a lightweight wrapper on this function. return_dict controls whether the method returns a Molecule and a dictionary representing the molecule, or just the Molecule. All other flags are as in the docstring I posted.
The init_with_xyz method no longer exists and shouldn’t be in the documentation at all.
Let me know if anything needs more elaboration. After I’ve heard back from you, I’ll post a GitHub issue about all of this.