It generally means restoring the appearance. Cleaning is involved, but there is also a lot of work removing sun damage and oxidation for instance from paint and headlights. Probably not the best explanation, I’m not an expert, but that’s the gist.

Not a euphemism, just a standard term! See https://en.wikipedia.org/wiki/Auto_detailing

It implies a much higher level of service. A high end car wash (full service including interior vacuuming and wiping down surfaces) is about $30 (yes, bay area prices). “Detailing” would probably be $200 or more and means leaving your car there all morning.

Yes, exactly. "Detailing cars" involves carefully cleaning them, polishing them, etc.