they watch your Pokemon and raise its levels
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It depends on what Pokemon you have in the daycare. The Pokemon that hatches from the eggs given to you by the daycare man will be the pre-evolved form of the female Pokemon you have in the daycare.
There is not a daycare in kanto
No
If you mean BREED Pokemon in Pokemon white, you put a girl and boy of the same Pokemon in daycare, and you will later get an egg from the daycare people.
if its the egg you get from the traveler then it becomes a togepi but if you get it from the daycare it will be the Pokemon that you have put together in the daycare