The quantities $\delta U$ and $\delta V$ are the infinitesimal variations of the potential density and potential respectively. There is an alternative derivation (from Landau & Lifshitz) that one can use that may help your understanding with the second question.
Consider the work required to deform a volume $\Omega$ (enclosed by surface S) by some infinitesimal displacement $\delta \textbf{u}$,
$$W = \iiint_\Omega \delta W d\Omega = \iiint_\Omega \textbf{b} \cdot \delta \textbf{u} d\Omega + \iint_S \left(\sigma : \hat{n} \right) \cdot \delta \textbf{u} dS.$$
Note we are just simply writing this as a sum of body and surface work. Here $\textbf{b}$ is the body force density and $\sigma$ is the stress tensor. The notation $\sigma : \hat{n}$ means to contract the tensor onto the surface normal ($\sigma_{ij} \hat{n}_j$). Using the divergence theorem, one finds
\begin{align}
W &= \iiint_\Omega \textbf{b} \cdot \delta \textbf{u} d\Omega + \iiint_\Omega \nabla \cdot \left[\sigma : \delta \textbf{u} \right] \cdot \delta \textbf{u} d\Omega \\ \nonumber
&= \iiint_\Omega \textbf{b} \cdot \delta \textbf{u} d\Omega + \iiint_\Omega \left(\nabla : \sigma \right) \cdot \delta \textbf{u} d\Omega +\iiint_\Omega \sigma : \delta \left(\nabla \cdot \textbf{u} \right) d\Omega\\\ \nonumber
&= \iiint_\Omega \left(\textbf{b} + \nabla : \sigma \right) \cdot \delta \textbf{u} +\iiint_\Omega \sigma : \delta \left(\nabla \cdot \textbf{u} \right) d\Omega.\\ \nonumber
\end{align}
Note immediately that the first term $\textbf{b} + \nabla : \sigma$ is zero since that is identically the condition of static mechanical equilibrium. This is also called Cauchy's first law of momentum or the stress divergence equation. So, therefore
$$W = \iiint_\Omega \sigma : \delta \left(\nabla \cdot \textbf{u} \right)d\Omega.$$
which is exactly what you have above. Relating this back to $W = \int_\Omega \delta W d\Omega$ shows that $\delta W = \sigma_{ij} \delta \varepsilon_{ij}$
The constraint $\sigma_{kl}|_S = 0 $ is sometimes called a stress-free boundary condition. In continuum mechanics, this is a natural surface condition which indicates you do not have any shearing forces because they would violate mechanical equilibrium. Note that
$$\sigma_{kl} = C_{klij} \varepsilon_{ij} = \frac{1}{2} C_{klij} \left(\frac{\partial u_i}{\partial x_j} + \frac{\partial u_j}{\partial x_i} \right) = 0 $$
where $C_{ijkl}$ is the elastic stiffness tensor.