Short answers, pulled from the story.
Hinayana means "Small Vehicle" or "Lesser Vehicle" in Sanskrit. It is formed from hina, meaning "little," "poor," "inferior," or "deficient," and yana, meaning "vehicle" or "path" toward enlightenment. The Pali Text Society's Pali-English Dictionary (1921-1925) defines hina with even stronger terms including "vile," "base," "abject," and "despicable."
Hinayana is considered derogatory because it was coined by Mahayana Buddhists to describe earlier Buddhist paths as "lesser" or "inferior" in contrast to their own "greater" vehicle. Modern Buddhist scholarship has deprecated the term as polemical, and scholars now prefer "Nikaya Buddhism," a term credited to Professor Masatoshi Nagatomi of Harvard University, to refer to the early Buddhist schools without the pejorative connotation.
No. Hinayana has sometimes been used as a synonym for the Theravada school, but modern scholarship considers this inaccurate. The main target of Mahayana criticism was the Vaibhasika school of Sarvastivada, not Theravada. Theravada, unlike the now-extinct Sarvastivada school, does not claim the existence of independent dharmas, and it was also geographically distant from the centers of Mahayana philosophical debate.
Hinayana is an umbrella term that encompasses the Sravakayayana ("Listeners Vehicle") and Pratyekabuddhayayana ("Solitary-Realizers Vehicle") paths. The 18-20 early Buddhist schools are sometimes loosely classified as Hinayana, but scholar Yijing noted in the 7th century that no simple correspondence existed between a Buddhist school and whether its members followed Hinayana or Mahayana teachings.
According to scholar Jan Nattier, Hinayana was created as a back-formation after the term Mahayana was already established. The term Bodhisattvayayana came first, which was given the epithet Mahayana ("Great Vehicle"). Hinayana was only added later due to antagonism and conflict between proponents of the Bodhisattva and Arhat ideals within the Sangha.
The seventh-century Chinese monk Yijing defined the distinction by practice rather than school membership. He wrote that those who venerated bodhisattvas and read Mahayana sutras were called Mahayanists, while those who did not were called Hinayanists. He also noted that both traditions shared the same Vinaya, the same prohibitions of the five offenses, and the practice of the Four Noble Truths.