That means "don't turn your transponder to 'ALT', just leave it in that mode it's in when it's parked", right? And do you set it to 1200, or does the actual number not matter when in "standby mode" rather than "alt mode"?
Depends on the model of transponder.
On really old transponders “standby” was a setting that would power it up and warm up the electronics so it was ready to go, but inhibit all transmissions.
On newer stuff that’s solid state it usually does a power up and checks firmware integrity and other self checks and also inhibits transmissions. It may also allow the ADS-B *IN* receiver to operate since that doesn’t require transmission *OUT*.
Code won’t matter. It won’t be transmitting in standby.
“Alt” won’t matter either. That’s whether or not you’re transmitting your altitude. Remember there’s “on” where your transponder responds with a transmissions to interrogation by a ground station, and there’s “alt” which takes your altitude source on board (blind encoder or encoding altimeter) and includes that extra information in the response. Altitude information is known as “Mode C”.
If a controller asks you to “stop Mode C” you’d go from “Alt” to “On”. Transponder still transmitting when interrogated but the (probably faulty, and driving the controller nuts) altitude information will be stopped.
For an official formation flight where one aircraft is talking to ATC and the rest of the aircraft aren’t, usually OFF or Standby are selected in the trailing aircraft. Standby is the better option of the two if you have it, since the transponder is ready to go at any time if the flight separates, and any receivers in it (such as ADS-B IN) are usually operable.
The newest transponders often also have a dedicated “VFR” button which flips them to 1200 and depending on model may also force “Alt” back on by default or not. Nice feature.
Always check your own particular transponder’s manual for complete details, of course. It’ll be in the required items on board.
As far as actually USING something like your ADS-B IN while truly flying formation, unlikely, unless your passenger is doing it. Your job in the trailing aircraft is to maintain position on your lead and follow their instructions (whether radio or hand signals) and you’ll be busier than a one-armed man in a paper-hanging contest the first time you do it under the watchful eye of a formation flight instructor, just holding your spot.
Your lead handles Aviating, Navigating, and Communicating for the flight. Your job is to stick right to your spot on their wing. Good leads know the challenges of what you’re doing to stay there and aviate and communicate in such a way that you know what’s coming up and makes it as easy as possible for you to stay with them through any maneuvering.
Your only communications job is to acknowledge lead. Usually with your position number. “Two.” That’s the most you’ll usually say for an entire formation flight.
(There’s other communication on the ground for start up and frequency changes and such... but this is the basics.)
The FAST card and training are highly recommended. Barring that, time with and good briefings with folks who’ve done it can be substituted for loose formation work.
It’s NOT recommended to just go out with two inexperienced pilots and attempt it. You’ll likely end up with a whole lot of airplane up close and personal in the window at some point that you didn’t want to see, and things can go wrong very quickly.
As someone said, a mile or so apart? It’s just two airplanes flying. You will probably be able to keep the other airplane in sight but sun angles and things can mess that up.
Now what’s your plan to avoid a collision? You know you’re inside of a mile to another aircraft and on generally agreeing courses but not quite sure where he went. Continue? Does someone circle to put some distance between you? What directions are your “safety outs” from each other if you lose visual contact? Etc.
Closer can actually be better in this case — IF you know how to do it. Much better visual contact but if you don’t know how to move away if someone turns into you, or don’t know they’re going to turn, and don’t have a breakaway plan for everyone...
You probably get the idea. Transponder is the least of your worries when operating aircraft in close proximity to one another. It’s just another item on the checklist. Important but not the MOST important part.
Hope that helps.