1. Yes, the script will perform as a ready-made site.
2. The script will come complete with a host of configurable options, and you customise it once it's installed on the server.
3. You don't need any additional software; as long as your hosting package meets the script's requirements it will run.
The people who sell these scripts will offer an installation service - for a few pounds they'll install the script for you, and make sure all the necessary server-side facilities are up and running. All you have to do is configure the various options, and carry out basic maintenance tasks.
When considering this project make sure that you've covered the bases - auction sites can bring their own set of problems, and you'll need to have a comprehensive set of policy rules in place before you even begin. You don't want to find yourself landed with a bunch of complaints from dissatisfied purchasers and/or sellers unless you have a clear-cut dispute resolution policy in place and visible for all to see. Whatever you do, don't launch your site until you've covered this aspect of things, thinking that disputes won't occur, because they will.
Running an on-line auction site can be fraught with legal complications, and you'll need to be aware of the various consumer protection acts now in force. There isn't space to go into a detailed explanation here, but I strongly advise you to consult a lawyer who specialises in consumer protection law before you commence trading. If you don't you may find yourself in serious difficulties at an early stage.