I know I can use the spline tool and adjust heights and whatnot to get roads (I would imagine this would work well for interstates/highways and other long roads), but are square street blocks and town roads usually modeled by hand in the video game industry? I know you can do it anyway you want, but what do most of you semi-professional/professional guys do?
Thanks!
What do you mean? You can use a giant flat plane and extrude the sidewalks. Unwrap and then texture. You can use the spline tool. You can use a city generator. As long as it works and looks good anything goes.
It depends. When the ground is mostly flat I would create them in a 3d program. Otherwise (when you want to fully integrate them into the landscape) use the spline tool 
Another way is to create the landscape (with the “free space” for the streets) -> export the landscape -> open it in a 3d program -> create your streets -> import them -> place them.