Difference between Assembly Deployment Target set to "GlobalAssemblyCache" or "WebApplication"

When I view the properties for my SharePoint 2010 project I can see an option of Assembly Deployment Target which can be set to either GlobalAssemblyCache or WebApplication.

1. 
   

   From this question I was able to figure out that setting value to GlobalAssemblyCache deploys DLL to C:\Windows\assembly. For WebApplication, it says that it will deploy to website/bin. What is the exact path where the WebApplication option deploys the solution?

   
   


2. 
   

   From this question it seems that custom fields cannot be deployed with option of WebApplication. They can only be deployed to GlobalAssemblyCache. Are there any other restrictions when deploying to WebApplication?

   
   


3. 
   

   While developing SP solutions which option should be preferred and why?