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I have it set up so that it connects to my phone via bluetooth, and I output audio from whatever service I want on my phone.

Also, you can get it to connect to your phone via a voice command ("Alexa connect <device name>"), when you want to use it.

I use Spotify, all of my Echo devices show up as different outputs in the Spotify app, along with the groups I've set up ("Everywhere").

I just discovered that if you say “Alexa, Spotify connect” then anyone can connect their phone as long as they’re on the same WiFi network as the device.

You can.

In the spotify app on my phone or computer I can choose an echo dot (or group of multiple alexa devices) as the output device.

Alternately, you can pair with an echo dot and use it as a bluetooth speaker.

You can use the Echo as a bluetooth speaker.