For tax reasons. If you are given stock you'd have to pay income tax on it when you receive it.
You can always pay the tax in stock itself at the time, though.
Not if the company isn't public; the IRS doesn't take shares of stock, you need to be able to convert it into dollars.
This is only true if there is a market for the stock (including if the company will buy back a portion from you, which many bigger startups will do) as far as I know. The IRS won't accept company stock for tax payment, it has to be turned into cash.
Exercising options is also a taxable event. If the difference between your strike price and fair market value at time of exercise is large enough you can find yourself in AMT land where you have to pay the tax on "profit" that you can't access because you've purchased an illiquid asset.
Yes but with options you have the option (heh) to control when and even whether you exercise (and thus pay the taxes). Options are a bad deal compared to RSUs in a lot of ways but this is their one big upside.
It gets worse than that. During the dotcom bubble pop, a lot of people ended up paying taxes on profit that was actually a loss because the stock value tanked after exercising. There were multiple cases of employees owing more in taxes than the value of their stock.
The whole point of options is to let you defer exercising until it's not an illiquid asset (which is why the 90 day exercise window is a problem).