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ofcourse, that's how it works
and you don't need that many for most cases
If you mean to serve content to the public, then Varnish is one good option. You could also do it with Squid, Apache, Ngnix, lots of other software. I used it successfully on pretty modest VPSes, but it's been a few years since I played with it.
If you have enough houses
Yes
i have some hands on experience with varnish. it is a very good tool. but its vcl language is always changing. i found some vcl files online, and had to use some old versions to use these vcl files. the latest version does not recognize them.