Character Background Generation 101
First of all, the background generator is optional and it discusses how to not take it too seriously even within its text. Please read its guidance in UC before asking for more, because you're about to get a lot of answers here that just restate it.
Above all, don't let creating a background become a burden for you. The goal is to help you play a character, not to paralyze you with decisions you don't want to make right now.
Use this tool to inspire creativity rather than as hard-and-fast rules to mandate rigid and seamless character backgrounds. Though the generator provides many foundational details of a character's background, it takes some creative thought to massage the specifics together. As you use the generator, feel free at any point to reject or reroll contradictory elements or ones that go against your vision of the emerging character. Like the background questions presented earlier in this chapter, the ideas on these tables are simply suggestions designed to channel and focus your imagination.
Second of all, you probably need to discuss this with your GM before using it for anything other than character background. The Iron Gods Player's Guide has specific campaign traits and suggested sourcebooks and your GM probably has chargen rules and specific trait limitations, and the extra traits and story feats and whatnot are optional rules that your GM may not plan to allow. Also, from the GM's guidance and the campaign guidance, you will get a feel for what might be "over the top" and what might not be - frankly given the Iron Gods background I am hard pressed to see any of the potential options, no matter how soap-operaey, as out of line with the feel of the campaign.
Character Background Generation 201
So now that you've gone back and done both of those things, and you're back and still want to use the Ultimate Campaign background generator to get details beyond what you'd readily make up yourself, here's how you'd proceed.
I actually ran a character similar to this in our previous Carrion Crown campaign, a Vudran witch who served her weasel familiar, who she worshipped as a god (see: Sredni Vashtar's Girl). You should decide which parts of the background you want to come up with yourself and have that already in hand. Like, I wanted for sure to be Vudran and have the trope of being enslaved to the weasel, but other than that I didn't have strong opinions. Then do a full random generation.
Now, you decide which parts you want to keep or adapt (and it may change your mind about some of your own generated background). Keep the campaign in mind and you not just can, but bear a responsibility as part of your gaming group, to adapt the events from these tables to include/refer to Numeria, technology, your fellow party members, etc. So "how do you choose" them? Based on what you think is right for your character, no one else can answer that.
Things that seem contradictory often are not. I remember generating a random bard as a PC using the large set of random tables in the 2e Complete Bard's Handbook. One roll was "always clean and cares about his appearance" and another was "rumpled demeanor." I thought it was a conflict for a second, then I remembered the careful "bed-head" of many Hollywood celebrities, where that rumpledness is part of a calculated look, so I kept them both. People in the real world often have contradictory experiences and personality traits.
Some don't have to be relevant in your character's mind. My witch PC had gone to an orphanage - that does't mean she couldn't have had living parents and 9 siblings, she just doesn't know them. It would provide something for a GM to bring into the campaign, however. (In fact, in Carrion Crown there's a Vudran woman in the werewolf chapter, and the GM immediately changed her so that I knew her from my orphanage). The goal of a lot of your background is to provide hooks for the GM - and you and the other players - to use to "call audibles" of this type so that the characters and the plot at hand are more intimately connected. So you don't have to know how every element fits at game start, and in fact I'd argue it's pretty undesirable that you do know, because that leaves fewer places for others to plug into.
Don't overdo it though - too much background will overwhelm your GM and other players and be worse than a moderate amount. Keep it to the amount you can remember (nothing's worse than when as a GM I put in a reference to a PC's backstory but they don't remember their own mentor's name or whatever) and consumable for your GM and fellow players.