I think most people do use large leverages in Forex. They do so because of the relatively small price movements in Forex. They don't always use the maximum level of leverage because they want to control their Risk, more leverage leads to more risk. And yes you can lose more than you have, and they will close your trades, this Is a Margin call.

Everyone uses leverage. There are also trader likes to lower leverage due to some restriction issues. Some brokers have a standard leverage, meaning it cannot be changed.