Yes, but you don't need to mess with it. Just enter the username and password during installation and you're set.
I think Wordpress is one of the easiest ways to set up a website for people who, like you, aren't intricately familiar with webdev, but have some knowledge.
You can get away without a database (and assuming you don't need anything too complicated, I recommend not using one). I've had a good experience with GetSimple - it's a content management system (like WordPress) but uses regular files instead of a database. Great for basic content, and still easy to set up and manage.
Self-hosting is a bit complicated if you're not already comfortable running a Linux server. Not sure about privacy (though I'm not sure how privacy intersects a public-facing website), but there are lots of hosting providers out there. I use DreamHost and have had a great experience there.
Web 1.0 means no interactivity outside of forms (client to server request<-> response cycle). Web 2.0 was the label used when sites started gaining interactivity, using Javascript.