The Recovery partition must reside on the boot drive. It takes up 650 MB and is created automatically when you install or reinstall OS X.
1. Boot into Recovery and select Install OS X. You'll need your Apple ID and password.
2. Not unless something goes wrong. You must back up all data, of course.
3. Because there's no easy way to do it and no point in making the effort.
4. Answered two posts ago.