Smart is like a software built to monitor your harddisk.
When SMART warns you about your harddisk, it generally means it
detects problems within your hardisks(which may be due to wear and
tear), meaning that your harddisk is going to stop working very
soon due to those problems
Yes, your harddisk will still work now, but in a the near future
it may just stop working.(That is why they tell you to backup your
data)
1) Yes, because it is mechanical fault , you have to change a
harddisk
2) Yes it is that simple, but you need to reinstall your
operating system in order for your computer to work. You can try to
bring your old harddisk to the shop, and ask them to clone the
content to the new harddisk, so that it will work when you just
plug it in