1) Yes
2) Space
3) Not discrimination. The customers size has direct relevance to the service provided. Would you ask UPS to ship all packages for the same cost, independant of size or weight?

As a fat guy, I was buying two seats before there were such policies. More comfortable for me, and no dirty looks. The biggest problem was trying to make a reservation online.
And southwest was so much cheaper, that I could get 2 seats for less money. And if the flight wasn't full, they would refund one of the seats. Works out for everyone.