Hive does not replace HDFS. Hive provides sql type interface to data that is stored in HDFS. Its basically used for querying and analysis of data that is stored. Hive in a sense actually eliminates a lot of boiler plate code, that you would have to write if you were using mapreduce. for example just think of how you are going to create different types of joins(left, right, bucketed) or group by clause or any other sql clause in mapreduce and you will get your answer (you lines of code will easily scale to 100's ). Hive provides them out-of-the-box. You dont need to write those lengthy programs in mapreduce. Hive already does that for you.
One thing to note is, Hive itself uses Mapreduce behind the scenes. So any group by, count, join is converted to mapreduce jobs only. You can change this though to Tez/Spark.
for your second question, hive does not provide any storage, it just uses a database (derby as default, MySQL would be a good choice if you want to use a different db) as a metastore just to store the metadata related to the tables, partitions, views, buckets etc.. (metadata is like location of tables, type of data stored in tables, partitions info of the tables, created date, modified date etc..) you create with hive.