1. In markdown you can specify a language to perform syntax highlighting within code blocks -- e.g. ```java ... ```. If you use "mermaid" there you can get the mermaid plugin to render that block. This is useful when providing a system overview, etc. in a project readme file.
2. Mermaid is a diagram rendering tool similar to graphviz and D3.js. It uses a different syntax for each chart type with the intention of making it easy to write and to read when looking at markdown source.
3. You would need to use a separate program like graphviz to do the layout and generate an SVG, PNG or other file that you can reference in your markdown or other document files. If/when mermaid provides a similar capability you'll be able to use that instead.