1): The disk doesn't seem to be emulated; it's just a rootfs in RAM.

2): See another thread here.

3): Check out cpux86.js. In the start() function at the very end, the following section might be enlighting (even though it is a bit obfuscated by a javascript compressor):

  function start() {
  [...]
    If=32*1024*1024;
    ya.phys_mem_resize(If);
    ya.load_binary("vmlinux26.bin",0x00100000);
    Jf=ya.load_binary("root.bin",0x00400000);
    start=0x10000;
    ya.load_binary("linuxstart.bin",start);
    ya.eip=start;

The files vmlinux26.bin, root.bin and linuxstart.bin are fetched from the server.