Yup, the parent comment is incorrect. SMS longer than 160 characters (in GSM 03.38 encoding) are split into multiple parts, each a maximum of 153 characters long, 7 characters are used to glue the parts together.
I believe it depends the implementation. I recall having a phone that would explicitly indicate a switch to MMS when sending longer messages.
I too recall that. I suspect it was a boon for the carriers, eating into your MMS quota. At the time though, my plan was unlimited SMS/MMS, so it didn't really matter to me.