Automatically resizes your images right in your browser, before uploading.
Before writing this I uploaded a photo straight from a digital camera sized at 2,969kb once resized by this plugin that photo was reduced to 620k. The image was resized to 1000 x 1000px with a quality of 100. Changing the quality to 80 resulted in a smaller file size of 200k. You can alter these settings in your media setting.
I don't think so. This looks like part of the reason this function is left out of WordPress core.
If the web browser supports HTML5 images will be resized. For browsers without HTML5 the Adobe Flash uploader will be used. If the browser doesn't even have Flash then a message will be shown (see change log) and no automatic resizing will take place. http://www.plupload.com/ shows the uploader component features which has some further notes on browser compatibility.