It's peat. Which is basically the accumulation of plant matter you get in a bog.
SOmething like $10 for a 10 lb bag.
"Where's the peat?" should do. Or just go find it yourself, it'll be with the rest of the bags of soil.
Not sure on the exact process, but it adds tannins and other organic acids that lower the PH.
Depends on the peat and the size of your tank, the flow you have going through it, etc. Generally a couple handfulls are needed and the amount it lowers your PH depends on a lot. Just adjust the amount through trial and error, if your PH has settled higher than you want it, add more to the filter.
Doesn't really matter, In the last container with some filter wool to catch any fine particles coming off it should be fine. If there's enough room. In the last two if you need more room.
Hmm, in theory it can, but even if you put heaps in your filter it's not going to drop the PH that quickly even if it does go down to 5 that the discus won't probably be able to adjust.
No, once it's dirty and exhausted throw it away and replace it.
Should be able to. If they have bags of dirt, they should have bags of peat.