Yes, that includes the Overlord.
Yep. It is worth noting that in Descent, "player" does not necessarily mean "human." Every hero in the party is a player, and the OL is a player.
in a 4 hero game, there are 5 players
in a 3 hero game, there are 4 players
in a 2 hero game, there are 3 players
This has absolutely nothing to do with how many humans are playing the game- for example you might have a single person controlling 2 heroes, but that still counts as 2 players.
In short, "each player receives" means "the overlord and each hero receives..."