I'm trying to wrap my head around the wording for Wedge...

The card says "While attacking an activated squadron, you may add 2 blue dice to your attack pool."

That means he only gets it, when attacking a squadron that has already been activated that turn? If it hadn't gone yet, because it wasn't activated with a command, or Wedge goes first in the Squadron step, he wouldn't get the extra dice?

Correct.

When the squadron's slider (the one wedge is attacking) is the opposite colour of the initiative token.

When the squadron's slider (the one wedge is attacking) is the opposite colour of the initiative token.

Agreed

this is why so many people have been talking about him and Dutch flying together.

http://starwars-armada.wikia.com/wiki/%22Dutch%22_Vander_Y-wing_Squadron