1. Yes, we're also talking about ChatGPT's free plan here too.

Ads could fund more quota or bigger models for users who don't wish to pay (and/or just make it more sustainable)

Google will almost certainly be doing this with Gemini, and if ChatGPT can't offer as much it leaves an easy reason for people to switch.

2. It does have ads in the default interface, though they're quite unobtrusive. You might also have a blocker. But yes, I suspect their size allows them to provide it mildly "at a loss" to support their ads elsewhere.