Basics of cedar siding

I'm about to buy a home that has cedar lap siding. Since this is new to me I have a few questions.

The home is four years old with cedar on N, E, and S. I have the impression from somewhere that cedar may have smooth or rough sides, well this is rough side out. I'm guessing the flecks and flakes I see are the remnants of the original stain.

1) I thought stains were more of a penetrant than a coating, so is it possible to peel or flake?
2) How to clean and prep for new stain?
3) The caulk I see at the corners is more on the surface and pulling loose from the wook. Shouldn't it be forced more into the joint to seal and adhere better?
4) Also, caulk seems to be silicone. Is this the best choice?
5) Can I just caulk where I find splits or must I replace the board?

 

There are many different types of stains, latex, oil base and waterborne. They also come in anything from almost clear to a solid color. Stains rarely peel or flake. It's hard to say what that stain is doing, site unseen.

Generally the prep includes cleaning the siding, often by spraying on a cleaning agent, letting is set but not dry and then rinsing it off, usually with apressure washer. Occasionally there will be a nail or two that needs resetting.

Clear to semi-transparent stains aren't usually caulked but where caulk is needed, a clear latex caulk is usually used. With semi-transparent you could also use a colored caulk if the caulk color is close. Solid stain can use white or colored caulk. Caulking a split is certainly cheaper than replacing the board and with a semi-transparent or solid stain won't be readily noticable. Oh and caulk should be forced into the joint so there is more surface area for it to adhere to.