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Nether warts are fungus-like plants that can be found in the Nether. It is an item of vital importance when making potions. It is found only in either loot chests or growing on soul sand inside nether fortresses.
Nether warts (via screenshot)
Nether warts are naturally generated in nether fortresses in soul sand gardens that are placed around stairwells. Nether warts can also generate in the courtyards of bastion remnants. Due to only spawning in these specific structures, it's entirely possible for a nether fortress or bastion remnant to generate without any nether warts.
A soul sand garden with nether warts (via screenshot)
Nether warts are necessary items for brewing potions, it is required for making the awkward potion which is the base potion for all potions except Potion of Weakness. You can also use nether warts to craft red nether bricks and nether wart blocks. Nether warts can be planted in soul sand for farming purposes. They can only be planted on soul sand but can be grown in all dimensions.
Brewing with nether warts (via screenshot)
Nether warts are necessary items for brewing potions and a few crafting recipes. Since you cannot brew any potions without them setting up a nether wart farm is highly recommended considering they only have a chance of generating in nether fortresses and bastion remnants.
A. Nether warts' primary purpose is to be used for brewing potions but it is also used to craft red nether brick and nether wart blocks.
A. No, the plant doesn't require sunlight and water to grow. As long as it is planted in soul sand it will grow.
A. Yes, nether warts can be grown in the Overworld as well.
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