1. No, the person doesn't see the email address you use for PayPal if you use Collected by Itch.io, because the payment goes to Itch.io. (And Itch.io pays you later on.)
2. Generally PayPal will let you know if you need a business account.
3. Depends on your country. You'll complete a tax interview and that will determine if tax should be deducted from your earnings. If tax must be deducted, Itch.io will do that and pay you the balance. Itch.io handles EU VAT when they collect the money.