Sports Talk

American here: how does promotion and relegation actually work?

So I've been watching English soccer for a few months and I keep hearing about teams going 'down'. Down where? Who decides? Do they get money when they come back up?

Also, what happens to the players when a team gets relegated? Do they all just leave? Is there a draft? (I'm guessing no draft.)

And why doesn't every league do this? Would it work in the US? Sorry for the twenty questions, but nobody at my work watches soccer and I'm too embarrassed to ask my nephew.