How writing Call/Put options work

Answer to your queries.
1) Yes, premium gets deposited into your account. But you need margin amount to sell an option contract. About 40K for one lot of nifty
2) Like you have said, it is both ways, either allow it to expire worthless or book earlier whenever you want and the difference is settled, either profit or loss.

Always remember one thing in this, use a strategy like short strangle, never do one side selling. Also keep SL as one sided big move will result in big loss. Always sell deep OTM options with premium that can give around 2% returns on the capital employed.