Why is investments in SIP considered a good option?

Many people advise about investing in systematic investment plans (SIP) in good mutual funds. Since I am new in investment matters, I am trying to understand why that is so.

1. Why does it involve less risk than investments made in the same mutual fund for the same amount and for the same period? (my understanding about these issues is immature, so the question itself may not be proper) (eg, consider investment of Rs 1000 for five years through SIP and investment of Rs 60,000 at a time in the same mutual fund: which one is better in the long run?)

2. Why is it assumed that after say 15-20 years or so, the returns are expected to be very high?

3. I invested (for tax saving) in an Mutual Fund when NAV per unit was Rs 42. Now NAV is Rs 39 per unit. The amount invested will be locked for 3 years. The past performance was of the fund was good. But what if NAV value keep decreasing day by day? Theoretically what would be my maximum loss? the entire amount invested?