1. is this a must have site for all photographers?
2. how exactly does the site work?
3. is this a good way to make money?

Might be a good way to get exposure if your work falls in line with the demographic and/or you learn how to game the system to get viewed.  Short of using it as a portal to whatever you normally use to make money, not sure it's getting anyone rich.

It's just a good place to post and share your work for the general public to view and members to comment and rate.
It's like Flickr but much better in that the interface and image rendering is excellent.

Don't think anyone is making money, you probably have it confused with DevientArt or something.

It's a good place to post work to share with others.  I like to see how I rank for fun.  It's also a good source of ideas and inspiration.  There are a lot of really good photographers on there.

I haven't used it to sell anything and I'm not sure if it would be a good source of making money.

At this point there's not a lot of MySpace/Facebook type photography on there..
ie: Girls shooting themselves in the bathroom with cell phones...

I find there's quite an assortment of really high end quality work that's very inspirational. (to me anyway..)
Exposure surely can lead to money but is anyone really making a lot of money from using any website to showcase their work??

It sounds like a good place to get exposed.. you should check into the © issues on the site, unlike facebook, you kinda loose your images there. All meta data is stripped and anyone can pull your image off and use it..  kind of like here on MM.

I actually opened an account 3 weeks ago. It gave me 14 days of full 100% access just like I was a paying member. The largest setback was when my 14 days were up, that I was limited to 10 uploads per week or pay to a "larger" account. No big deal. I can manage that only 10 uploads per wk if it means a free account. So I uploaded quite a few images in those 14 days and set up my storefront.

As of 2 days ago the rules have changed. My account has since been disabled and the only way for others to see my work or to sell work is to upgrade and pay a fee. I will probably just delete my account.

I actually like it as the site requires almost no effort to upload a picture. I can open it, click up load, drag a full res' jpeg from my D800 across (no need to resize in Photoshop like other sites) and hit go. two minutes later a good quality image is up, with Exif data if I wish to leave it for the benefit of other photographer's.

You can also crop your image for a better thumbnail display after you have uploaded the image.

Don't bother too much about getting many votes, as that aspect is sown-up by a cartel of Eastern European's, shooting pretty girls naked ... and why not?

I mainly use it for bits and bobs that are unrelated to work.

It's just a place for photographers to say "Wow I like this picture now comment on mine."

Its more of an experimental alternative to PhotoSIG. 
http://www.photosig.com

500px's leaky rating system is quite different.  No doubt with all the feedback they are getting they will refine this.  With 10,000's of photos on there it will be impossible to keep the best-liked photos buoyant.

Tried it and didn't like it.  Seems like a ghost town compared to DA or Flickr.

It is okay but something about the style of what's popular there leaves me cold.  More for the crowd that digs hdr.  Nothing wrong with having your work out in different photo communities if they all feed back to your actual website or Facebook fan page.