While I think the other two answers are good, I think there is a better explanation of what is happening with the windshield when a rock hits it.
When a rock hits a windshield and puts a "bullseye" into the surface, it creates areas within it called stress risers. Stress risers cause places in any structure where the stress is localized to a small area. Small flexes in the substance of the window causes more stress in these given areas. Because the stress is localized and cannot disperse across the entire windshield as it normally would, it causes cracks to form. The crack acts as a boundary layer, a place the stress cannot go through. The stress gets to the crack and can either go left or right. The bullseye acts as another boundary layer, so the stress goes the opposite direction and the crack lengthens. Once the stress has a channel to run though, it will continue to follow that channel (path of least resistance) until it hits another boundary layer (usually another edge or another crack) or until the stress is abated enough the crack does not lengthen. Hot and cold cycles can make the crack elongate due to unequal stresses forming on either side of the crack (think of it as pushing and pulling on either side of the crack).
Your questions 2&3 are very subjective, as this depends on your local laws and your threshold or tolerance for looking through the cracks. Where I live, any crack which is on the driver's side of the window will cause you to fail your safety inspection. The main reason being that it impedes the driver's ability to see the road and surroundings. If the crack stays on the passenger's side, there is no issue. Me personally, I don't like cracked windshields. I don't like looking through them. I don't like other people looking at my vehicle and thinking something bad about me. These are all just personal things ... like I said, subjective. As was stated, the bullseye alone (with cracks less than 1") can be fixed.
In the US, if you have full coverage insurance on your vehicle, most insurance companies will pay for it to be fixed without the deductible. If you don't have full coverage, or if your insurance won't cover it, you should to be able to find a mobile windshield repairman to do the work for under $100 fairly easily. There are kits you can purchase to do this yourself, but I doubt the results will be anywhere close to stellar. I've seen what goes into doing the work to fix them. It takes some specialized training to really make it look good and for it to be a long lasting fix.