1) The characters interact with each other, conversations, events, things like that. It's like writing a story with a lot of authors.
2) It depends. Some GMs prefer that people post at least once a day, some more, some less.
3) Generally they end when they lose activity, when people lose interest. However some come to a close when the storyarch has ended, depending on the rp.
4) This I don't know. I guess it depends on the situation.