Q1.
Suppose we place a piece of wood between the compass needle and the magnet. Will this affect the deflection of the compass needle?
Answer
No, it will not. The compass needle deflects by very nearly the same amount as before. The wood does not block the magnetic effect.
Magnet → air → needle : needle deflects
Magnet → wood → needle : needle still deflects, by about the same amount
Magnet → wood → needle : needle still deflects, by about the same amount
Why it happens: wood is a non-magnetic material. The magnetic effect of a magnet passes straight through non-magnetic materials as if they were not there. Only the distance between the magnet and the needle really matters — so keep the magnet at the same distance while sliding the wood in, or you will fool yourself.