1) Review is carried out by the referee on the field, with help from assistants on the field. External officiating (a guy in a booth) is not involved in the decision process.
2) All awarded penalties are automatically challenged as are all "it did cross the line" situations. If a referee does not give a penalty or the ball is judged not to have crossed the line by the referee there is no video review available.
3) Free kicks awards, corner/goal kick awards, and offside no calls can be challenged by the manager of either team. However each manager has just one challenge, which is renewed if they are correct, removed if they are incorrect.
4) Upon reviewing the incident, referee has the remit to award the original decision or to overturn it: awarding the appropriate decision, a free kick, a competed drop ball; no caution, to add or rescind a yellow or red card.