1) I am pretty sure this is impossible.
2) It is to do with whether the student can use that drag item as many times as they like. It that box is not ticked, then when a student drags one of the boxes, it gets used up. With that option turned on, when a student drags an item, it is copied, and the student can take more and more copies to fill in as many boxes as they like.
(If that is still not clear, try making an example question, and try turning the option on and off, and preview the question after each change to see what difference it makes.)
I guess we did use an unnecessarily technical word for this. Can anyone think of a better phrase to use in the UI, which does not take a lot more space than the word 'Infinite'?