Gravel and sand is fine. You could also do only gravel. It will depend what you want in the joints between the stones. If the stones are set in sand you will fill the gaps with sand. If they are set in gravel you will fill the joints with gravel.
The hardest part of the project is getting the base level and flat. As for a boarder. You could use some of that plastic edging for pavers after you bring up the grade. If its a significant change you could build a wall. This could also be done with the same flagstone. Sort of a stacked stone wall. That wall would need mortar to hold the stones in place. There are some new adhesives in a caulk tube that would work as well. Build that wall, or change you grade before you start laying your base.
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