That's assuming you work in a place with upward mobility or the ability to advance. At my last job, I worked in a place being a new hire meant you were pretty much on the same level as a senior engineer who had been there 10, 15+ years(not including the clout and reputation, though). The only way up from there was to become a manager, which meant waiting for someone who had been there 20 or even 30 years would have to quit or retire.
Yep! If you're near the top of your pay grade, then there may not be much room to move up with a raise and a promotion might be the best way to go. Hard to know that without talking to your manager though. Managers will often hint at this by saying something like, "There's just no room to bump you up in your current job." That's a signal that pursuing a promotion might be the better way to go.
That might depend on the type of promotion. It's actually becoming shockingly common these days (at least in the US?) to not give raises on promotions anymore.
If they do promotions at all, instead of filling higher level vacancies with new hires (at "raise by changing jobs" rates). This also explains why those raise-less promotions are even possible: those who accept them see them as an investment in their future market value, the next time they change for a raise they can enter on a higher level.
Being the very best at your job doesn't always put you in line for management to have you stop doing that job... "too valuable to promote" is a thing.