Do applications install for all users or only for one? If I install a application using *.dmg image using user user1, it will be available when user2 log in as well? or it will be available only for user1 ?
It depends where it installs to.

If it goes into the main Applications folder, then yes, it's available to all users - though each user will have their own distinct prefs, saved under their account.

If it's installed to /Users/[your name]/Applications, then it's only available to that user.