I've been checking Apple Photo Stream FAQ and still have some fundamental questions:
1. It says iCloud storages your photo stream for 30 days. Then what? Do they gradually disappear from photo stream, from old to new, to give space to new photos?
That's exactly what happens... Although they may continue to appear under photostream on the device once they have been downloaded from photostream in the cloud. Once you hit 1000 photos in Photostream on the device itself, they will begin to disappear from there.
2. Do those photos disappearing from photo stream ALSO disappear from your camera roll? This is confusing: From there, you can browse your recent photos or move the ones you like to your Camera Roll or another album to keep them on your device forever.
No. The camera roll is local to the phone.
3. Why I still have have very old photos in my photo stream? Aren't they supposed to automatically disappear?
Because they already downloaded from the cloud and you do not have more than 1000 photos in the photo stream on the phone yet. Once you do, they will start rolling off.
4. If I turn My Photo Stream off in my iphone iCloud settings, it tells me "...will delete all photo stream photos from your iphone". Does this include those that are ALSO in the camera roll — I currently have some photos in both the roll and the stream.
No. The camera roll is independent of photostream.