In answer to your questions:
1. Yes, you can edit the field values and remove all other countries if you wish. You can also edit other fields such as "State" and make it relevant to your location.
2. This is not a default feature of the theme, but you can read more about this functionality
here.
3. There is no function for this built into the theme, or plugin available for this purpose at this time, so it would require customization on your part if you were looking to implement it.
4. If the country is not already available in the dropdown then this could be because it's not supported by the default payment gateway which comes with the theme, PayPal. You can however, purchase
other payment gateway plugins from the AppThemes marketplace. Thanks.