deployment - service URI

Forgive me if these Questions are too novice , there are few things I'm trying to understand ,

1.       Regarding deployment – does the  "services" tag added to the compiler , embed the server address in the flv binary ? ,
and so every deployment needs new compile ?

2.       Why does the flex swf , must be inside the folder hirrachy of the .net web application ?

Thanks ..

Alon.