1) This piece has a very gentle and calm nature and shows warmth and peacefulness of life in the shire. It also portrays a sense of belonging.
2) The first part of the song is in D major, changes to B major and finally back to D major.
I'm not very sure if there are any other changes in key in the middle of the song. The major key is used as it sounds more gentle and warm as compared to a minor key which sounds mysterious and does not suit the purpose of this song.
3) The purpose of this song is to portray the tranquility of the Shire and what life was like there: peaceful and happy. Everything was carefree.
signing off with much hopes that my answers are not too far off,
Samuel