usually, leads would be converted manually, like Paul showed.
I’ve done a few projects with conversion via workflows, but there had be some specific requirements.
For your 3rd question, check out this video, which gives a bit of an overview of the general concept:
Convert lead option is missing for me too. Currntly using version 8.7, couldnt see this in earlier versions too. Haven’t converted the lead already, Its not showed up for the newly create leads.
Tried the settings anyway but couldn’t see the convert lead option in the actions.