Hello, I'm not really experienced with FR, but maybe this is enough to help you.

3) How does it maintains database does it uses SQL, if so ? whether it provides any alternative to maintain database of username and password ? for example like by using files….. etc.

FR is able to store users and their attributes in a couple of backends including sql database and a users text file. See the modules section of radiusd.conf for more information.

1) What is the maximum length of username and password allowed in freeRADIUS ?

That probably depends on the backend you're using, or look in http://www.freeradius.org/rfc/rfc2865.html if there's a limit.

2) What is the maximum number of users allowed to authenticate? I mean, how many users does it maintains in its database?

I guess that's a question of performance first. Propably all backends can store _enough_ users and FR can also handle them.

4) Is there any necessity or possibility to use secondary RADIUS server ?

Technically it's not necessary. But if you use it for something important it's obvious better to have one... ;-) It's possible of course to set up 2 RADIUS servers.