It can adapt to lower octane fuel by adjusting the timing, it's far from optimal, and at high enough boost level you need higher octane regardless. At non boost levels, you need less octane rating to prevent knock, but under boost you need higher octane rating. So you run the higher octane fuel all the time, and that is less efficient.

Correct. This involves relying on feedback from knock sensors which literally "listen" for the specific tone that a detonation event produces (usually somewhere in the 6-7 kHz range depending on cylinder geometry). You will sometimes hear this phenomenon referred to as "pinging", and it’s actually audible to the driver if severe enough. There is also another method of knock detection which involves using the spark plugs to detect the resistance of the air inside the combustion chamber immediately after an ignition event, which I believe is an indirect way of measuring cylinder pressure. I’m not positive on this, but I think the idea is that you want peak cylinder pressure at the moment of time where the piston is like 20 degrees after top dead center. Earlier than that, and the majority of the force is wasted pressing directly down on the crank shaft. This is more advanced and is used only in specific cars such as the E90 BMW M3.

If the ECU detects knock, it will retard timing. This works to an extent, but you’re ultimately worse off than if you just ran premium fuel in the first place. The other issue is that (on systems with conventional knock sensors) this causes you to basically “bounce” off of the knock threshold. Knocking is terrible for the bearings inside of the engine and should generally be avoided, but running regular fuel in a car that calls for premium results in the ECU constantly trying to creep up timing (or switch to the high octane map), only to be confronted with knock again.