Use HTML5 (datalist) autocomplete with 'contains' approach, not just 'starts with'

'contains' approach

Maybe this is what you are looking for (part 1 of your question).

It goes with the limitation of "starts with" and changes when a selection is made.

'use strict';
function updateList(that) {
    if (!that) {
        return;
    }
    var lastValue = that.lastValue,
        value = that.value,
        array = [],
        pos = value.indexOf('|'),
        start = that.selectionStart,
        end = that.selectionEnd,
        options;

    if (that.options) {
        options = that.options;
    } else {
        options = Object.keys(that.list.options).map(function (option) {
            return that.list.options[option].value;
        });
        that.options = options;
    }

    if (lastValue !== value) {
        that.list.innerHTML = options.filter(function (a) {
            return ~a.toLowerCase().indexOf(value.toLowerCase());
        }).map(function (a) {
            return '<option value="' + value + '|' + a + '">' + a + '</option>';
        }).join();
        updateInput(that);
        that.lastValue = value;
    }
}

function updateInput(that) {
    if (!that) {
        return;
    }
    var value = that.value,
        pos = value.indexOf('|'),
        start = that.selectionStart,
        end = that.selectionEnd;

    if (~pos) {
        value = value.slice(pos + 1);
    }
    that.value = value;
    that.setSelectionRange(start, end);
}

document.getElementsByTagName('input').browser.addEventListener('keyup', function (e) {
    updateList(this);
});
document.getElementsByTagName('input').browser.addEventListener('input', function (e) {
    updateInput(this);
});
<input list="browsers" name="browser" id="browser" onkeyup="updateList();" oninput="updateInput();">
<datalist id="browsers">
    <option value="Internet Explorer">
    <option value="Firefox">
    <option value="Chrome">
    <option value="Opera">
    <option value="Safari">
</datalist>

Edit

A different approach of displaying the search content, to make clear, what happens. This works in Chrome as well. Inspired by Show datalist labels but submit the actual value

   'use strict';
var datalist = {
        r: ['ralph', 'ronny', 'rudie'],
        ru: ['rudie', 'rutte', 'rudiedirkx'],
        rud: ['rudie', 'rudiedirkx'],
        rudi: ['rudie'],
        rudo: ['rudolf'],
        foo: [
            { value: 42, text: 'The answer' },
            { value: 1337, text: 'Elite' },
            { value: 69, text: 'Dirty' },
            { value: 3.14, text: 'Pi' }
        ]
    },
    SEPARATOR = ' > ';

function updateList(that) {
    var lastValue = that.lastValue,
        value = that.value,
        array,
        key,
        pos = value.indexOf('|'),
        start = that.selectionStart,
        end = that.selectionEnd;

    if (lastValue !== value) {
        if (value !== '') {
            if (value in datalist) {
                key = value;
            } else {
                Object.keys(datalist).some(function (a) {
                    return ~a.toLowerCase().indexOf(value.toLowerCase()) && (key = a);
                });
            }
        }
        that.list.innerHTML = key ? datalist[key].map(function (a) {
            return '<option data-value="' + (a.value || a) + '">' + value + (value === key ? '' : SEPARATOR + key) + SEPARATOR + (a.text || a) + '</option>';
        }).join() : '';
        updateInput(that);
        that.lastValue = value;
    }
}

function updateInput(that) {
    var value = that.value,
        pos = value.lastIndexOf(SEPARATOR),
        start = that.selectionStart,
        end = that.selectionEnd;

    if (~pos) {
        value = value.slice(pos + SEPARATOR.length);
    }
    Object.keys(that.list.options).some(function (option) {
        var o = that.list.options[option],
            p = o.text.lastIndexOf(SEPARATOR);
        if (o.text.slice(p + SEPARATOR.length) === value) {
            value = o.getAttribute('data-value');
            return true;
        }
    });
    that.value = value;
    that.setSelectionRange(start, end);
}

document.getElementsByTagName('input').xx.addEventListener('keyup', function (e) {
    updateList(this);
});
document.getElementsByTagName('input').xx.addEventListener('input', function (e) {
    updateInput(this);
});
<input list="xxx" name="xx" id="xx">
<datalist id="xxx" type="text"></datalist>


yet this thread is posted about 2 years ago. but if you are reading this thread, you maybe need to check a newer version of your browser:

Current specification: https://html.spec.whatwg.org/multipage/forms.html#the-list-attribute

User agents are encouraged to filter the suggestions represented by the suggestions source element when the number of suggestions is large, including only the most relevant ones (e.g. based on the user's input so far). No precise threshold is defined, but capping the list at four to seven values is reasonable. If filtering based on the user's input, user agents should use substring matching against both the suggestions' label and value.

And when this post written, behavior of Firefox (51) and Chrome (56) had already been changed to match the specification.

which means what op want should just work now.