I was very confused but the following thread cleared my doubts:
Multiprocessing, Multithreading,HyperThreading, Multi-core
But it addresses the queries from
Broadly speaking, yeah, but "parallel" can mean different things.
It depends what tasks you want to run in parallel.
Not necessarily. Some (indeed most) threads spend a lot of time doing nothing. Might as well switch away from them to a thread that wants to do something.
The OS handles thread switching. It will delegate to different cores if it wants to. If there's only one core it'll divide time between the different threads and processes.
The number of threads is limited by software and hardware. Threads consume processor and memory in varying degrees depending on what they're doing. The thread management software may impose its own limits as well.