It is also possible to set the sky in-game. Note that skies can change the lightning on your map and thus make the terrain look different. For example, I used Fogged Sky I think and my terrain was darker than usual.
No, you do not. Put your camera in an angle in which you can see the sky. How to do this? Keep CTRL pressed, right-click in the middle of your screen (keep the right mouse button pressed) and drag the mouse arrow to the top of the screen (just below the Tools, Advanced, Module, Help tabs). Then hit K on your keyboard.
If your mouse has a wheel, you can hit the wheel to reset the camera.
Only .gifs, .jp(e)gs and .pngs will be able to be previewed in the Hive, meaning, only these formats can be viewed in the website without needing to be downloaded and opened by a program, so you should try to put them in one of these formats.
To make a good screenshot.
1. Enable and maximise both AntiAliasing and Antistropic Filtering. A reasonable value for older cards is 8x AA and 16x AF. DirectX 11 or better complient cards can support even higher values (higher is better).
2. Make the view as large as possible (most pixel area). Boosting with a custom resolution larger than your display's native resolution can help.
3. Get the map view correct.
4. Screenshot using Print Screen button.
Now before submitting you might want to do some processing of the image.
1. Consider getting the image to a standard aspect ratio (4:3, 8:5 etc). Do this by cropping the edges that break the aspect ratio (do not resize, use crop).
2. Consider resizing the image to a smaller resolution if size is a problem. Do this by dividng with powers of 2 for best results.
3. Save the image as an appropiate file format. Jpeg1 is recommended with using a low compression for high quality shots and higher compression for preview shots (quality maters less). If you have a high resolution shot, feel free to up compression a tad to compensate for the extra resolution.
Be aware that .jpeg is a lossy format with more noticable image quality loss (artifacts) as compression quantity is raised.