What happens when I edit web.config?
- Yes. It will be recycled.
- Yes. They will lose their session.
- Yes. You can safely edit the file. I suggest you to read this MSDN article : Working with web.config Files in Windows SharePoint Services
The application pool will restart and session state will be lost. Imagine each ASP.NET application (as defined in IIS) is a program on the desktop. Saving web.config will do something similar to closing the program and reopening it.