The effect from the ability overwrites other effects that set power and/or toughness if and only if those effects existed before the ability resolved. It will not overwrite effects that modify power or toughness (whether from a static ability, counters, or a resolved spell or ability), nor will it overwrite effects that set power and toughness which come into existence after the ability resolves. Effects that switch the creature's power and toughness are always applied after any other power or toughness changing effects, including this one, regardless of the order in which they are created.

An “unblocked creature” is a creature that attacked and wasn't blocked. Creatures aren't “blocked” or “unblocked” until the declare blockers step, so activating this ability before then (or after combat ends) will have no effect.

Creatures stop being unblocked as the combat phase ends. However, they'll stay 4/1 until turn ends.

Inkfathom Witch doesn't cause creatures to lose their abilities.

If Inkfathom Witch is attacking and unblocked, it can make itself 4/1.