Answer to Question 1
One consequence of the wavelike nature of light is that there is an inevitable small blurring called a diffraction fringe around every point of light in the image, and you cannot see any detail smaller than the fringe. Astronomers can't eliminate diffraction fringes, but the fringes are smaller in larger telescopes, and that means they have better resolving power and can reveal finer detail.
Answer to Question 2
A telescope performs best on a high mountaintop where the air is thin and steady, but even at good sites atmospheric turbulence spreads star images into blobs 0.5 to 1 arc seconds in diameter. That situation can be improved by a difficult and expensive technique called adaptive optics, in which rapid computer calculations adjust the telescope optics and partly compensate for seeing distortions. This limitation on the amount of information in an image is related to the limitation on the accuracy of a measurement. All measurements have some built-in uncertainty, and scientists must learn to work within those limitations.One way to improve resolving power is to connect two or more telescopes in an interferometer, which has a resolving power equal to that of a telescope as large as the maximum separation between the individual telescopes. Modern technology has allowed astronomers to connect optical telescopes to form interferometers with very high resolution.
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X-ray diffraction photograph by Rosalind Franklin