Yes it does under normal circumstances. If it also loses GPS for some reason, it can't RTH, and so it goes into Altitude Hold, which means it would hold altitude, but may drift. That is why they want you to keep the controller with you. If you look close, the demo videos have the controiller in a backpack.
I do believe you can use the pebble watch and/or the Iwatch with Tower,
If you have GPS locked before take off Yes...Your controller will vibrate and if you hit max Altitude same vibrate if you do not lower altitude it will RTL automatic