"Hola, ¿cómo te llamas?"
Translation:Hello, what is your name?
Nombre is the word for name, while llamar is 'to call' so while we translate como te llamas as "what is yoir name" it literally translates as "what are you called" we are taught that it means "what is your name" as that is how the question is commonly expressed.
Its like how there is not a word for "you're welcome" but they say de nada/it's nothing which is how they express the concept, or that they don't actually say goodbye, but adios/to God, which expresses the idea of goodbye, or also hasta luego/until then expresses the idea 'see you later'
Yes, but it depends where in the world you're using it and to whom.
Here's a useful guide to the differences between the informal tú and formal usted:
I understand the difference between tu and usted in normal situations, but in this particular one, I was surprised that you could use the informal if you did not even know an individual's name. The commenter below provided an example that would make sense (asking a lost child their name).