I had no idea what you were talking about, but looking it up it does look like it's possible to use phone numbers in navigation systems, primarily numbers of businesses. I was able to find several accounts of the feature using the keywords カーナビ 電話番号検索 - using just ナビ gets a lot of hits for directories of phone numbers (mainly used for identifying spam callers), and using GPS instead of ナビ gets hits for tracking cell phones.

I have never used this and didn't realize it was possible, but I don't drive and rarely take taxis. I can see why this would be popular, especially with tourists - the language isn't a barrier to conveying a number. It also avoids issues with address formatting.

I've never heard of that. Is it a recent thing (past five years) or a really old thing?

It's still common to use phone number to input location for car navigation because its Japanese input system is not good. Phone number is easiest but sometimes points wrong position if you use older maps. We won't use it on smartphone's map app.

~2 years ago. Navigation of rental cars worked best with phone numbers. Some cab drivers also preferred phone numbers. Most likely some service to lookup phone-number->GPS became popular - I haven't seen this outside Japan so far.