/u/TheGreenReaper7 actually already linked you to the thread with my post, but just to reiterate the high points if people don't feel like clicking through (you should though!), duels were technically illegal in Italy in the 20th century, but still happened often enough, and the police totally turned a blind eye. Large crowds were not common though, as part of the whole "turning a blind eye" required that the duel happen somewhere low key. In the case of the Aldo Nadi v. Adolfo Contronei duel in 1924, there was only a small group of witnesses. The police almost always knew when a duel was to happen, and would stay away until after the duel ended so they could show up and say that they didn't see anything.
In the case of Santelli v. Contronei though, because the insult had been so public (at the Olympics!), involved international rivalry (Hungary v Italy! Even if both were Italians...), and involved well known individuals, the public was eating it up. The fact that there was a month between the challenge and the duel itself only helped to build up expectations. Although I haven't found a source that explicitly states it, my impression is that the reason this duel was fought on a barge in the Adriatic Sea was because of how high profile it was, which meant the police simply couldn't do their normal "turn a blind eye".
So to answer your questions, no, large crowds rarely attended - at least in the 19th/20th century when dueling was technically illegal, but people loved to read about it.
This is a good question. Duels were a rarefied form of feud. Feud as a phenomena requires continuance and therefore public acknowledgement. Here are some other threads which deal with the subject but do not directly deal with the public aspect. But hopefully someone will contribute a meaningful analysis of duel as a ritualised performance here.
"Tuesday" Trivia | Frivolous Fights: History’s Least Important Fisticuffs and Feuds
How common was trial by combat throughout history? How was it conducted?