When I pause the game does it still count the time of how long I played for on that playthrough? What about reading a book in the game?

I'm 99% sure it still counts towards your total playtime.

I thought pausing doesn't count towards time, but reading books does along with when you're in your inventory or looking over the map. That is what I thought anyway, could be wrong.

I'm sure of it. But I could be wrong though.
I might try it myself later.