1) yep, everything, the code can hit an environment and run based on that environment. No configuration is provided with the code. That being said how you implement it can be pretty flexible you could separate them all out into separate variables or just have one variable with an XML string as the value and parse that string to get configuration, the point is to have the configuration injected into the application by the environment. The details of what those variables look like is the prerogative of the development team.

2) there are several options, a developer (gold CD) virtual is one, where a virtual is set up and configured based on updated configuration and an automated script, or having a environmental script that sets up the development variables on the developers workstation (just make sure it stored in version control independent of the code). Each works well, it just depends on preference, there are a lot of ways one can set it up to work in their environment, just try a few and see which one best fits your development culture.