Ubuntu 16.04 will soon come to an end within a couple of days. After April 30, 2021, Canonical will not release any security patches or bug fixes for Ubuntu 16.04.
Whether to run the upgrade or move to a fresh server is a matter of personal preference. If you don’t mind the down time while the os upgrades then some consider that easier. I prefer to spin up a new server and migrate. You can do that with less down time and always have a working server should something go wrong with the upgrade.
There’s a topic about moving to a new server and using rsync to move the data.
Yes, not only it’s a good idea but you should do it more frequently.
Yes, you can update to any Ubuntu version (or any other distro), that’s the good part of Discourse being in Docker.
You can do both, a clean install will probably take less time and ensure you can have the forum up during the whole process. Only a few minutes with the forum in read-only.
I don’t really think they care, the application is in a virtual environment and doesn’t really know which underlying OS it’s running in.