I’d mask it off before painting because the flex plate and converter would look goofy with overspray on one section, but water and cleaner won’t do it any harm.

Personally, I feel the ‘dust covers’ are a safety item that should always be reinstalled on the car.
The teeth on the flywheel are as sharp as a buzz saw and can do some serious damage to you or some unsuspecting critter under your car- Not to mention the damage that could happen to the car or an innocent bystander should a rock or other debris get in there and get shot out like a bullet. Don’t ask me how I know.
Just my .02
Elm

You can take the shield off to paint but personally I’d reinstall it when you’re done.

Drive a car on a gravel or crappy secondary road and you’re asking for trouble.
Ever get your shin or ankle shot at by a weed wacker projectile?
Same concept just a whole lot worse.
Just sayin’

Motors in marine applications often see a couple inches of water in the bilge and that water flows around and under the motor often splashing up on the flywheel cover.
You won’t damage anything if this area gets wet.

I am no expert and don’t know about all engine appplications, but I’ve never seen a gasket or any sealant used.
The cover or shield is there for a reason, more than likely to keep dirt and debris out to the flywheel teeth which need to be clean when they engage with the starter gear.