Docs is Google's word processor, similar to Microsoft Word or LibreOffice Writer. You should find most of the functions are replicated and it should be relatively easy to get the hang of.
There's no need! Work in Docs is saved automatically and continuously as you make changes. In the event of a crash, you shouldn't have lost any work at all.
Docs documents include a full version history by default. You can use this to view any changes you've made to a document, which includes deleting data. From the menu at the top, select File, then Version history and finally See version history. You will be able to see previous versions of the document from the menu on the right-hand-side, along with what was changed and by who. When viewing a previous version, an option to restore it will appear at the top of the page.
Yes! Google Docs supports collaborative editing. When multiple people have the same file open, their identities appear with a colour in the top-right-hand corner, and where they currently are in the document will be displayed using the same colour. You can see changes they make as they make them. Changes they make will also be attributed to them on the Version History.