They aren’t essential, but they are actually useful. There have been some experiments with banning shorts, but they lead to larger spreads on longs because market participants have to hedge by going risk-off on longs instead of shorting affirmatively. Shorts can create moments of volatility, but they improve overall trading liquidity and reduce frictional cost of capital.

Yes. A short is a way to tell the market you are wrong about value, and by doing so push the value down to more reasonable levels.

Of course they are. If you believe a stock is undervalued, you buy it. If I believe the same stock is overvalued, I sell it. That's how price discovery happens. If only people who already hold the stock are allowed to sell it, then price discovery is impeded.