1. Normally, a number from the native range is translated from the telephone number to the SIM's IMSI number. Alien number are recognized by their prefix. With MNP activated, a translation directory is introduced where each entry translates to a carrier entry - usually there is a central directory that's copied/updated by all carriers on a frequent basis. Numbers not in the directory are still recognized by their prefix. Technically, this is somewhat similar to routing table entries in packet networking.
2. Called numbers are first checked in the translation directory, alien calls are routed to the other carrier, internal calls are translated to their IMSI no. and routed locally.
3. Not usually - some countries do it this way but most use a central database.