Scaling out is provided via Infinispan's clustering facilities which are powered by JGroups, a group communication layer. Consistent hash distribution and total replication are the two main mechanisms to ship data around, and yes, dynamic topology changes are supported.
Yeah, scaling up to provide different JVM settings requires restart. Data backups can be configured via shared cache store configurations, or rolling upgrades can be performed to do live upgrading.
Heap sizing is heavily dependant on your data.