Files can be supplied as one PDF containing the inside pages and one that contains the cover, or as a single file with all of the pages in it. Either way, the file(s) should be exported directly from the design software as "Single Pages" instead of multi-page spreads (for example, a 5.5x8.5 book should be exported as 5.5x8.5 pages and not as 11x17 spreads that each has 2 pages)
A minimum of .25" or 1/4" of safe margin is required for all booklets. This means that page numbers, images, text, and any important elements that are not intended to go right to the edge should be at least .25" away from the edges.
There can be natural variation in the cutting process, as the operator cannot guarantee that every booklet will be cut in exactly the same place. Secondly, a circumstance known as "Creep" can occur with saddle stitching, especially with thicker paper stocks. Creep is where the bulk of the paper at the spine due to the gathering of the sheets causes the inner pages to extend or "creep" further out than the cover when folded. Below is an exaggerated view of how the inner pages extend beyond the edge of the outer pages when folded (this is for illustrative purposes only. The actual amount of creep is usually between 0"-.125", depending on paper weight and page count).