We don’t put it on the pasta while eating, we put it inside the pan and let it melt. This is not at all uncommon. It helps to make sure the individual pieces don’t get glued together. (Although I prefer to use sunflower oil instead of butter.)
Yes, they are separate concepts. Butter is ма́сло, oil is олі́я (a food item) or на́фта (fuel).
Why don't you accept - "Do you eat macaroni with butter?"
"Макарони" could be both - "pasta" (макаронні вироби) or "macaroni". In English "macaroni" is a specific type of pasta.