Question 1

Is there a way to set the system so that every document uploaded is forced with version control on automatically?

A System Administrator can make this change in the File settings in the Administration section of PI. It's a global setting and will apply to all files. See File Settings.

Question 2

What value does the check out and check in feature do?

Check in/out keeps people from accessing the document when somebody has it checked out. That same user must check it back in to allow others to work on the document.

Question 3

How does version control really work?

Version control was designed to upload the latest version over top of the previous version. PI will keep a history of the versions in the Versions tab in the bottom of the page. Feel free to download any of the previous versions at any time. See Using Version Control.