It's because M is the roman numeral for a thousand and a million is a thousand thousand. (Although it wouldn't actually be expressed that way with the real roman numeral system; MM would be two thousand).
Probably because M is already an abbreviation for thousand, e.g. CPM.
That's true, but the AP Stylebook says $...M means million; I too have only seen this used among the MBA types.
I don't know, I cargo-culted it from the m-team types in my last couple companies. ;)