1) chocolatedaddy did a pretty good job of explaining what the codomain is. here's my two cents:
we all know that we can think of a function as a machine. you input an x-value in and the machine churns out a y-value for you. let's say we did this multiple times. we get a SET of x-values that we tried, and a SET of y-values which came out of the machine. a bit of a divergence but the definition of a function is just when each element in the SET of x-values correspond to a different element in the SET of y-values.
now sometimes when a function is too complicated or incomplete, we don't know for sure what the output would be for certain x-values. that is we know we have a SET of x-values we could try, but the SET of y-values remain ambiguous. however, what we do KNOW is that the SET of y-values lie in a bigger set of numbers, that is, the set of y-values is a subset of this bigger set. this bigger set is referred to by mathematicians as the codomain.
2) yeah that's fine
3) it's best if you do draw a dotted line over the axis, but more important is that you put Asymptote y = 0 or Asymptote x=0 beside the line.