What it does is perform an action at a certain rate.
Lemme explain it for you (Note that it is only an example )
.Initialize variables for the program
0->C->X
.Just to make it look nice
ClrHome
.Set up the timer interrupt
fnInt(T,0
.Main program loop
Repeat getKey(0)
.If the counter is zero
!If C
.Display and increment X and put a new line
Disp X+1->X>Dec,i
.Reset the counter to 50 again
50->C
End
.Because Disp is silly
FnOn
End
.Clean up and return
LnReg
Return
.The timer
Lbl T
.Just decrement C
C-1->CIn short, it's an example program that counts up at regular intervals. Note that the only weakness to this method is, if you don't reset the counter when it reaches 0, it will have to count down all the way from 65535 to 0 again. (This normally should not be a problem)

No, it should as accurate as the interrupts are as timers, providing that you don't miss when the timer is 0.

Actually, something I missed: if the counter will hit 0 n times per second, then taking over an nth of a second will cause it to skip a cycle. (Very similar to interrupt routines, in fact)
But, again, unless you do a lot of stuff, this shouldn't be a problem