Welcome to Diablofans!
1) No, it's a separate damage reduction multiplicator. It applies to all elements except physical (which is a resistance type as well), but in its own category and independent of the resistance values you see on your character sheet. It's important to keep this distinction up between armor, all resist, and other damage reduction means to understand how things add up. You can import your profile to d3planner.com and hover over the toughness stats to see how it is being calculated.
2) You need to beat a GR70 (in time, so under 15 minutes) to be able to get primal items, yes. But not only from crafting (there's almost no useful items that can be acquired through crafting; maybe Reaper's Wraps for some necro builds and Hellfire Amulets), so not sure if you literally meant this "crafting" bit. Basically as soon as you clear that GR70 any item that you get (from a drop, from Kadala, from bounty caches, from crafting) can be a primal.
3) Not exactly sure what you're referring to; it's difficult to generalize as sometimes there are caveats and exceptions and so on, but in general if some description says "reduces enemy damage by X percent" or so that also applies to elites, yes.