An old traditional way of mashing is called decoction mashing. Back in the day, malt was typically less modified than it is today, and to get the most out of malted barley, a decoction was necessary. Today, a decoction is not needed, but can be used to extend the malt profile of a beer. Undermodified malt can be found out there and special ordered (I have done this for pilsener malt and it made a great beer). Lately my preferred pilsener malt is the Weyerman floor malted Bohemian Pilsener malt. It also is slightly undermodified and the floor malting helps to make a beer that comes closest to that classic German malt flavor found in the smaller German Breweries (like Ayinger for example).
1) It is not necessary to do decoctions to raise temperatures like back in the day. One or two can be done or more if so chosen, and it doesn't need to be done until conversion is complete. Lighter beers are better off with one, where darker beers 2 or more, as this helps provide color as well. Again, use quality German malts here as that is how to obtain best results.
2) When making a German Pils or other light German beer, use a short (10 minute) decoction or even two. This will minimalize darkening of the malt. If making a darker brew such as a Dunkel or Bock, then doing two 30 minute decoctions can add color as well as depth to the beer.
3) I have read and heard that decocting specialty grains is a bad idea. I have a rule of thumb about only using a small (3 oz or less) of German Carafa malt (similar to chocolate malt) for color (such as in a Schwartzbier). Never use crystal malt in a decoction or in a German beer period as Germans do not use it in their beers. And yes this includes Octoberfest beers as well.