1)When I tie mine, I use embroidery floss, but I think yarn would work ok too, as long as it isn't a slippery yarn. I sew down from the top, back up through the bottom, maybe 1/8" away and tie a square knot (they don't slip out or come untied as easily). I've also heard of doing a surgeons' knot, but not tried it. Clip the ends to about 1" or a little shorter. I usually tie about every 4" at the corners where seams meet. If I've used larger pieces in a block than 4", I'll tie in the center of it. I just try to be consistent with knot placement. (Clear as mud?) I like tied quilts, I think they are fun.
2)If I do the binding where you fold from the back to the front, I make sure to leave enough on the back to double it before I fold it over. That way there are two layers of fabric on the edge and it is stronger. The binding gets the most wear and frays faster. It is not my favorite way to bind, but I have done it a couple of times.