Q. 1. What does "Baptism by Desire" mean? My understanding is that it is as valid as the Baptism by water.
A. 1. In the Catechism of the Catholic Church, # 1281, it states:
"Those who die for the faith, those who are catechumens, and all those who, without knowing of the Church but acting under the inspiration of grace, seek God sincerely and strive to fulfill his will, are saved even if they have not been baptized (cf. LG 16)."
A Catechumen is one who is receiving instruction from a catechist in the principles of the Christian religion with the intent of being baptized upon the completion of his/her classes. If this person dies by accident, his/her desire to become a Catholic has saved him/her. Why? Because for Jesus, nothing is impossible. Jesus can save anyone that He wants to save. Jesus knows the hearts of everyone. Jesus knows the intent of he/she who sincerely wanted to become a Catholic but who suddenly was called to be judged before the Heavenly Throne.
It should be noted that when a reference is made to "his/her desire to become a Catholic," this means that the Catechumen believed in everything that the Catholic Church teaches, the Canon Law, the Catechism of the Catholic Church, the Tradition, the doctrine, the teachings of the Magisterium, the Encyclicals of the Popes, all the teachings that Catholics are expected to believe.
There are to be no exceptions. The Catechumen cannot believe most of the teachings of the Catholic Church but exclude one teaching such as married priests, female priests, homosexuality, birth control, etc...