This is a property of the font. Every character of the font has four associated lengths specified in the tfm (font metric) file. Height, Width, Depth and Italic Correction.
1 When you use
\/ TeX extracts the dimension from the font metric file, scales it by any scaling that has been applied to the font and then inserts that much horizontal space.
2 Often you need aesthetic judgement around punctuation as to whether it is needed. (But LaTeX
\textrm and similar command do apply it automatically and get it mostly right.)
3 Well the correction spacing is applied, and also any ligatures or kerns that would be between those letters are lost. (Originally I added most of the time here).