Typically, for development, one will start a clean image in the morning and load it up with a combination of newly compiled code and automatically cached previously compiled code. This is mostly invisible to the user unless something goes wrong with the cache and it has to be cleared. The unaware user could think they're recompiling everything every time.

Yes, that's quite fast. The files are kept in a version control system so you update from that first as well.

The use cases for images would be: delivery of applications to users, or (internally) delivery of some fixed set of underlying code that is used as a substrate for development but that wouldn't normally be changed by developers.

Normally, the developer has an image running all day, and does development and testing in it, but (unless needed for additional testing) doesn't save that image as a new binary that others can run.