This is normal behavior for MO2. MO2 strives to keep the games folder and data folder clean from the mods installed and activated in the left mods pane. When an executable is run from within MO2 it uses its virtual file system, VFS, to present those files to the game.
Yes this is true.
Settings / paths.
Your "Base Directory" is the home location of your instance. Depending on how you did your install it may contain the Downloads, Mods, Caches, Profiles and the Overwrite mod, and yes it is a folder but MO2 refers to it as a mod. It can also contain the MO2 related files.
Use the folder icon on the toolbar to access all of your folders.