Marking a document with who it went to, or what it is for, is a simple way to discourage it travelling further than intended.
CONFIDENTIAL tells a reader nothing they did not assume. A mark that reads with a name and a date tells anyone holding a copy exactly where it came from, which is what actually changes behaviour.
If you send the same document to several people, mark each copy differently. A leaked document then identifies its own source, which is the entire reason organisations do this.
Always keep an unmarked original. Watermarking writes a new file, so your clean copy survives, but it is worth being deliberate about which one you file and which one you send.
By someone determined, yes. It is a deterrent and a trace, not a lock.
Set the opacity so the page stays readable. Most people go too dark on the first attempt.
No.