Those lines? The texture in the middle is without any edge padding for an example, the texture around it is the texture as it actually is. I wouldn't release something with no edge padding.
No, that's the old Terrain method. The new Landscape method uses the Layer Blend node. Here's an example http://www.polycount.com/forum/showthread.php?p=1598641#post1598641
I've never seen (...or noticed, anyway) this sort of thing used on a character. Anyone have an example to demonstrate why one would use this? It's most interesting.