A single phase 230 volt motor with 700 ft of wire would need #3 wire to keep voltage drop within manufacturer specification. The 3 phase motor can use #6 wire.
Yes the grundfos motor is dual rated 208-240 volt. Most other brand sub motors are not.
The biggest reason for a VFD is to reduce pump cycling. A standard pump installation uses a pressure switch with a 20 psi differential between on and off. The pump runs at 100%. The excess flow of the pump over what is being used fills the pressure tank. An 88 gallon pressure tank actually stores a little over 20 gallons of water. Let's assume that this 5 hp pump set 500 ft deep pumps 20 gpm and your using 5 gpm. That means that when the pump turns on, 15 gallons per minute are filling the pressure tank. That means the pump will run for 80 seconds and shut off. Then water will flow out of the pressure tank at 5 gpm. This will take 4 minutes. Then the cycle will repeat over and over. With the vfd, the pump will run at what ever rpm it takes to maintain the 5 gpm flow at the predetermined pressure, say 50 psi. When demand is satisfied and the pump runs at minimum speed for a pretty amount of time, it goes to sleep. Then when pressure drops to the programmed differential pressure the pump starts back up again. I normally program a 15 psi differential and boost the pressure 5 psi before the pump goes to sleep.