Answer to Question 1
One theory of why time distortion occurs is that the right hemisphere (for right-handers though for left-handers it may be the left hemisphere) is more dominant during meditation. The left hemisphere is the time keeper and the right hemisphere is believed to engage in non-time linked thinking. Therefore, during meditation as the right hemisphere dominates, we lose our perception of time. Usually, this means that a 20 minute meditation seems much shorter, more like 5 to 10 minutes or sometimes even less.
Answer to Question 2
Allen (1983) discussed six indicators of an altered state that may be associated with meditation. These are time distortion, ineffability, present-centeredness, perception distortion, enhanced receptivity, and self-transcendence.