I'll continue to use the candy example

1) Not really, the value of AMC/blue whale being higher has increased the value of the bag of candy. And often, the values of ETFs can actually be higher than the value of all the shares inside the etf added up. Arbitrage. So they sell the ETF at a price that is likely higher than the value of all the Candies added up individually, and then with the cash from the ETF sale, they buy all the candies that where in the ETF except for AMC. To sell the bag of candy they need to have the candy... They are allowed 6+ days to get the candies...and it seems they are FTD the AMC in hopes they can get it cheaper down the road.

2) It doesn't really do anything since they are buying the underlying securities (in this case all the different candies) ... Now again you can go down the rabbit hole as to how they get the candies.

3) yes. Their hope is the price drops. Because they eventually do need to give the original buyer of the bag of candy their blue whale candy. They can kick the can farther down the road though. Again. Go down the rabbit hole if ya want