When I plug in a USB will it only use the battery when our power goes off?
Yes, that’s how it works.
Yes, more or less. When the power is added, the batteries are not used for main operations, but there is still some limited continuous drain on the batteries. I believe this to be extremely low, it logically should be, but however low it is, it is sufficiently high that Blink feel the need to mention it in their support FAQ. Relevant document linked below:
and to save you looking for the specific wording, here is the appropriate extracted text.
“Also keep in mind, there will be some drain on your batteries even when your device is powered by a USB cable.”