1: Face ID works in portrait only and not landscape on iPhone 11 and earlier, and on all iPhone SE generations, regardless of iOS version. With iPhone 12 models and newer, and with iOS 16 and newer, Face ID is available in both portrait and landscape.
2: Absolutely expected, longstanding, and documented behavior.
Details about the passcode: About Face ID advanced technology - Apple Support
The passcode or password is the basis for your iPhone security (and for the security of any locked notes!), not Face ID. Face ID is a shortcut that avoids having to enter the passcode or password as often, meaning you can more easily use a longer passcode or password for better security.