I try to answer some but not all of your questions. I hope it fulfills your needs:
The limits imposed on the German army were written down in the Treaty of Versailles, which was signed on 28 June 1919 and went 'effective' not before the begin of 1920. Nevertheless the imposed army limits went into effect before that in kind of a transition period. I'll give further information on this transition below. But first, let's take a look onto the Treaty of Versailles and its army limitations (Source: Articles 159 to 213 of the treaty; click):
By a date not later than March 31st 1920 the German army was to be reduced to 7 infantry and 3 cavalry divisions. The total number of soldiers, including officers and logistics, must not exceed 100000 men. It was supposed to be used only to defend and control the newly drawn German borders.
Not more than 4000 officers
Number of coastguards, customs officers, forest guards must not exceed the levels of 1913. The police force, too, but their number had to be adjusted to the acknowledge the steady increase of population.
The number of guns, mortars and things alike was to be decreased to the targeted size of the army and was to be observed by the Allies.
German production of arms, munitions and other war material was capped and supervised. Importation of war material into Germany was strictly prohibited.
Ban of the production and storage of poisonous gases, tanks, armored cars, warplanes and submarines. No artillery devices above 105mm, no naval guns above 203mm)
Abolition of the universal compulsory military service in Germany, only voluntary enlistment.
Until the March 31st 1920 the German navy has to be cut down to 6 battleships of the Deutschland or Lothringen type, 6 light cruisers, 12 destroyers and 12 torpedo boats. The manpower of the navy must not exceed 15000 (again including officers and logistics) after March 31st 1920 (not more than 1500 officers).
All German warships, which are not in German ports, do not longer belong to Germany.
The Western border to France, the so called "Rhineland", had to be de-militarized to create a buffer zone for the French
How was the German army downscaled?
After the defeat a new military force was needed. The following doesn't take into account the various Freikorps (independent corps), which are a whole new topic.
On March 6th 1919 the "Vorläufige Reichswehr" (provisional army) was formed from the remains of the old army. The provisional army consisted of 43 brigades and was downscaled to 20 brigades when it was formed to the "Übergangsheer" (transitional army) on October 1st, 1919. In May 1920 it was downsized again to about 200000 men and now had 7 infantry divisions and 3 cavalry divisions. On October 1st 1920 the army reached the number of 100000 men like the Versailles Treaty demanded. The name was changed once again to Reichswehr (National Army) and should remain with that name until Hitler replaced it in 1935. Regarding the navy read all terms with navy instead of army).
Sources: German law to enact the restrictions and the Übergangsheer , German law to the order of the new army
How this impacted the army and the whole German society is a broad question which cannot be answered in a short paragraph. I'm running low on time right now and will just give a short non-scientific brief outline.
The German population did not like it. They and especially the upper classes took the whole Versailles Treaty as an insulting and humiliating process. Parts of the army simply did not obey the order to demobilize and/or transferred into Freikorps. Unemployment numbers rose significantly.
Military research was halted for a while, until ways were found to bypass the Versailles treaty. Tank technology was researched under the title of agricultural machines and tractors, passenger planes were developed which had suspiciously few places for actual passengers but for 'luggage' and so on.
If until tonight European time nobody else has bothered to give a detailed description of the Treaty's impact on the German army and its surrounding society, I'll give it a go. I hope I could help a little.