1: If the problem involves complex geometry or flow patterns that cannot be accurately captured in 2D, then a 3D model would be necessary to obtain accurate results. However, if the problem is relatively simple and the flow is primarily in one direction, then a 2D model may be sufficient.
In general, 3D models can provide more detailed and accurate results but are computationally more expensive compared to 2D models. Therefore, the choice between 2D and 3D modeling should be based on the specific requirements of the problem and the available computational resources.
2: That's correct. One phase would be water, and the other would be air. You may have to patch (initialize) the water in the domain. VOF model will track the distinct interface between the two phases.