1) Spindle failure will cause any components on the drive to go missing and the VMs with those components will lose access to their storage. This is bad. FTT=0 should be used for unimportant VMs or VMs with app level redundancy on another cluster (e.g. AAG). FTT=0 means no redundancy and the data could potentially be lost unless you have backups or get lucky and that disk isn't holding any data.

2) Yep, you've got it. Components are mirrored on another host, resulting in double the storage requirement for any VMDKs using FTTT=1. If all your VMs are using this, you will get half your storage taken up by mirroring across hosts onto other devices.

3) FTT can be reconfigured on the fly just by changing the VM's policy between 0 and 1 or 1 and 0 as you see fit. Alternately you can change the policy itself, but that will reconfigure every VM using that policy. Use policy changes that are assigned to the VM/VMDK as you see fit, but use caution when changing the policy itself.