Welcome to the forum!
1. Cv is configuration variable. Basically, settings you change in the decoder. Things like address, start voltage, are basic ones. Others deal with how the decoder controls the lights and how it responds to commands sent to it.
2. Yes. How? the short answer: put a decoder into it. The long answer: each manufacturer presents a different challenge. Installing a decoder is wiring the decoder between the locomotive pickups and the motor and lights. That is where the different challenges come from, figuring out how the electricity gets from the rails to the motor and where to put the decoder. So far the oldest loco I have put a decoder in is a brass steam engine from the late 1960's to early 1970s era. It works great.