I'm pretty sure they are crosssfades going on.
Prevents a digital clip if the two waveforms don't align perfectly.
I am also pretty sure I saw that confirmed by staff somewhere here.
This is correct. There's also been a big jump in the number of RealTracks BIAB can read from. Prior to the introduction of the Utility Tracks, the RealTrack Medley Maker provided a sub-mix to read and program an additional 10 RealTracks per Legacy Mixer Channel. It was confirmed by PG staff that a total of 70 instruments could be configured in a variety of ways to play either simultaneously or consecutively.
The BIAB Mixer can read, select and generate 70 RealTracks creating a 70 instrument mix including cross-fades, specific audio selected for intro's, outro's, fade-in's and fade-out's. Since the introduction of the 16 Utility Tracks, all 24 tracks now have the RealTrack Medley Maker feature and one can see from the attached screenshots of the RealTrack Medley Maker - the feature includes the main instrument and 10 additional slots for a total of 11 RealTracks per Mixer Channel. This feature shows it should be possible to read, select, generate a song with 264 instrument in a single render.
Because it's digital, there's no audio degradation like there would be with analog bouncing and mixes. The RealTrack Medley Maker feature is also available in the Standalone Plug-in located in the RealTracks Picker.
I agree with Matt the newer versions of BIAB likely put a greater strain on PC resources than older versions.