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A catalogue lists your products with photos, names, descriptions and prices inside WhatsApp. Customers browse it from your business profile or from a message you send, and can send you a cart of the items they want.
The advantage of selling in a conversation is that questions get answered at the moment of doubt. Answer quickly, offer a payment link and confirm the order in writing. Afterwards, send updates as the order is packed and shipped so the customer does not need to ask.
Each cart and order should end up on the customer's record, so repeat buyers are recognised and follow-up is possible. See the catalogue and checkout page for how orders sync to the CRM.
No, but linking to your store helps for products not in the catalogue.
WhatsApp sets the limits, which can change. Check Meta's current documentation.
Payment is usually taken through a payment link, depending on the methods you enable.