Materiality is judged by whether the information would significantly alter the total mix available, which is a question of substantial likelihood rather than certainty. Earnings ahead of release, a pending merger, a failed trial, a large contract win and an imminent regulatory action are the classic examples.
Non-public means not broadly disseminated with time for the market to absorb it. A press release issued seconds ago is arguably still non-public; a fact buried in a filing from last quarter is public even if nobody read it.
Possession alone is not unlawful. Liability under rule-10b-5 requires a breach of duty, which is why misappropriation-theory and tipper-tippee-liability exist, and why firms use restricted lists and information barriers rather than relying on individual judgement.
Related: insider-trading, misappropriation-theory, tipper-tippee-liability, regulation-fd, rule-10b-5