It's wishful thinking and daydreaming more than entertainment.
I wouldn't recommend it, but I can understand it.
That makes no sense. When someone plays the lottery they don't put their life on hold until they win. Nobody seriously plans their life around a big lottery win, most people just play it for fun, the feeling of anticipation just before the draw. After a draw takes place and they've not won, they just go back to whatever plans they had before. Gambling addiction is more serious, but many people are casual gamblers, including those that play the lottery every week. I don't play the lottery often, but I can see for most people it's a harmless activity.
You'd be surprised. Especially if we expand the "lottery" to cover betting (horses, etc), gambling, and such stuff.
If they could have much better results putting that energy to another use, then, yes, simplistically we can say that they are idiots.