yes fluoride diffuses into enamel and chemically and mechanically hardens it. this effect is strongly linked to better dental outcomes for children and adults. also, tons of places actually remove fluoride to the needed levels because it is naturally higher.
nah it's actually pretty low, toothpaste isnt in your mouth for a huge amount of time and it needs to be a certain level of nontoxic for edibility. this is why dentists still do fluoride soaks. the fluoride in the water also accumulates in and hardens bones a bit, though not a ton.
I then looked to experts who make a career of studying theses things and are held to standards and peer review.
There is a Cochrane review on this topic just updated last month. The answer is that yes it does help reduce childhood caries at least a little bit.