Hello... and welcome to the forum!
To your first question. Php is what is known as a server-side tech. This meens that php runs on the server, creates html output and sends it to the client (browser). There is no way to view the (php) source of such a site. Right click (and view source) of this forum for instance. Its created in php but all you'll see is html.
Of course there are open source projects around that let you download the source for viewing but honestly, for a beginer, these will just seem overwhelming. php can create quite complex applications.
As for question 2. For a basic (local) setup you'll need a webserver with php installed and configured. Both of which can be run on your local machine. Apache is a great server and highly recomended and you can get php from the http://php.net site.
Most people will also want a database, mysql is probably the number one choice, but I prefer postgres.
Some of these packages are (at times) a little troublesome to install for a newcomer (dont know why) and so there are also complete LAMP and WAMP installs available that take care of the whole thing for you. Just do a google search for XAMPP.
Hope this helps.
ps; You might find this free online book of interest too!