1) Novice is more controlled and speeds are lower than in I and A groups. Having less required prep is also a move to get more people out on the track who have never done a track day before. You follow a CR/coach in your assigned group - groups are determined by pace, slow to fast. There is no passing unless your coach initiates the pass on a straight.
2) Each group gets 20 minutes per session, in this rotation: Intermediate, Advanced, Novice. 20 minutes on-track, 40 minutes off track. 1 hour break for lunch for all groups (sometimes this is a bit shorter, but not often).
3) The pit area is open, the whole track is open to wander around. There are bleachers on corners, bridges to stand on and watch, etc. Bring your own chairs and a pop-up tent if you're not renting a garage ($50/day on top of track day fee). There's nothing specifically for kids to do that I have seen.
4) Chairs, cooler of snacks/drinks, something to provide shade, whatever tools you might need for your bike (other riders in the pit have tons of tools, I doubt anyone would mind lending something if you didn't have it).
5) I don't think they offer any sort of compensation, regardless of weather conditions. Do not go to Mid-O if it is damp or wet. If it starts raining, think of all the fun times you had before the first drops of water hit the track, pack your stuff up and have a nice trip home. The track is great when it is warm and dry, but the sealant gets really slick when it is wet. That's the reason no pro organizations race bikes there anymore. I overheard this from one of the owners (Richard Varner) of MotoAmerica last year at Pittsburgh, "I'd love to do something at Mid Ohio, but with the track the way it is, until they fix the problem, we aren't going to consider it as an option." Long story short, don't go if it's going to be raining or wet . If it isn't raining or wet, the track is wonderful.