Of course you can. The de facto standard bootloader, GRUB, is the reference implementation of the multi-boot specification.
Yes.
Yes.
Yes.
So that you can choose to load either linux or (usually) windows.
Dual-boot or multiboot.
Get Linux!
many linux distributions you can just download and burn to cd and then boot from cd afterwards and most of them have the dual boot option so you don't need to create one but if you'd like to make one you can use a bootloader like grub or syslinux but most linux distros already have a dual boot option.
boot the system you need the file to be in, and navigate to the other systems folders.
"Mode?" They're two separate operating systems. If you're in a dual-boot, you simply reboot and select Windows instead of Linux from the boot menu.
Yes you can. Ubuntu's WUBI uses the Windows bootloader (NTLDR) to boot Linux. It also uses the Windows filesystem (NTFS). This, however, is not the traditional way to do things. The traditional way to dual-boot Linux and Windows is to use a generic bootloader such as Grub to boot both Windows and Linux.
Yes. Doing so isn't particularly difficult, and most Linux installation discs can guide you through the process.
Dual booting is not restricted to Linux. Dual booting refers to the presence of two operating systems on one computer. Switch/choice between these operating systems is determined at boot time (either via bios or boot manager), therefore only one operating system is at use at a time.