1. It matters because oils oxidize rapidly (and can begin breaking down) in the presence of high heat. You want the oil to be relatively fresh while using it to cook. This is less of an issue with highly refined oils, but a problem with most natural oils.
2. Oil isn’t affected by leidenfrost, but the food you are cooking is. This effect prevents the food from falling below the oil layer and sticking/burning to the pan when the oil is moving due to water boiling off. When water molecules in the food come in contact with the surface of the pan below the oil, leidenfrost forces them to float back above with the food and allow oil to flow back into the space.
Moving food as you cook it helps with this as well. If you cook at the wrong temperature without this effect, oil gets displaced from below the food and it sticks. This is especially difficult with very wet foods with minimal structure like eggs.