$\mathbb{Q}[x,y]/\langle x^2+y^2-1 \rangle$ is an integral domain, and its field of fractions is isomorphic to $\mathbb Q(t)$

Hint $\ $ for $\rm (1)\!:\ x^2\!+y^2\!-1\ $ is irreducible (so prime) since $\rm\ 1\!-\!y^2\ $ is not a square in the UFD $\rm\:\mathbb Q[y],\,$ indeed, the prime $\rm\:y\!-\!1\:$ occurs to odd power (equivalently apply Eisenstein using the prime $\rm\: y\!-\!1)$.

For $(2),$ besides the Wikipedia entry on Pythagorean triples, be sure to see also the article on the tangent half-angle formula. This provides further intuition behind such rational parametrization. In particular it explains the Weierstrass substitution, which is widely used to reduce the problem of integration of rational functions $\rm\:R(sin(\theta),cos(\theta))\:$ to the much simpler problem of integrating a rational function $\:r(t).$

For 1., just prove directly that $x^2 + y^2 -1$ is a prime element of $\mathbb Q[x,y]$. If you want to, you can use Gauss's lemma, which reduces you to showing that it is irreducible, which is particularly simple. (But you can also prove it is prime directly pretty easily --- you will more or less recover the proof of Gauss's lemma in this special case.)

For 2., you need to rationally parameterize the conic $x^2 + y^2 - 1$. This is a standard part of the theory of pythagorean triples. (See the wikipedia entry; note that the quantity called $m/n$ there is your $t$.) The same geometric argument shows that any conic can be rationally parameterized if it contains at least one point defined over the ground field.