1. Yes, transparent. Same for tiles, unless you disable it.
2. It may be a sprite or may be plane B
3. It has to be for the virtue of configurable resolution, scrolling and zoom.
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Thanks for the answers.
I'm thinking that one use for "plane B" would be as a non-scrolling text overlay on top of the game screen - for displaying player scores, lives, and other information - like many arcade machines had back in the day.
I guess I should read up on Super Nintendo scrolling and zoom to find out how this sort of thing was done on other systems...