It absolutely does include wounded. Ukraine keeps their wording vague, perhaps on purpose, but there’s no way their estimate of KIA is 4-5x higher than any credible western estimate.
It’s still an absurd number of casualties, and it’s absurd that Russian citizens don’t seem to care at all.
As I understand their war aims, they need this particular land because without it they lose access to the Black Sea, which severely curtails their access to the Atlantic. Their other ports are in the North Atlantic and tend to be frozen over and unusable during the winter. If they lose Sevastopol, they're greatly reduced as an Atlantic power.
They could realistically have kept Sevastopol and the rest of Crimea if they just hadn't invaded the rest of Ukraine; now it's all at stake.
But even so, if they lose Sevastopol, there are other Russian ports along the Black Sea, notably Novorossiysk. While that's much less strategically located, and costly upgrades would be required to function as a marine base, it's not strictly true that they would lose access to the Black Sea altogether.
Apologies in advance if this is hopelessly armchair, happy to have my amateur observations nuanced.