What can we do with UCWA API (Lync)? and What can we not do with UCWA API?

Question 1

A good wealth of information surrounding UCWA is available at http://ucwa.lync.com paying specific attention to the Documentation menu. A good rundown of features can be found at Core-Features which do not currently (CU3+) include screen sharing, video, voice, data collaboration (sending a file).

It is possible to place a audio call using a feature named Call-Via-Work which requires the user provide a callback number that Lync will use to connect you with the remote party, but it is not exactly the same as an audio call between two parties.

I want to access UCWA API in android code, is it possible?

There are sample libraries available (UCWA Helper Libraries) in JavaScript, but it is quite possible to use the libraries to construct code to run on an Android platform (Java, etc).

Question 2

As per the About link of UCWA, API helps you to do the following things,

-Anonymous Web Chat.
-Support audio conferencing
-Light up IM & Presence in your Line-Of-Business app, including Windows 8, iPad, and others
-Inline Instant Messaging into your application (Contextual Communications)
-Search for Skype and/or business contacts
-Better together with UCMA Customer Care family of apps

Also you can refer this site UCWA Capabilities