It was planned to leave the tower with 3 engines turned off. During flight two more engines appear to have flamed out (shut down).

Starship is unique in that it has so many engines, which add redundancy. They can (re)start engines mid-flight.

With the loss of 5 engines, this demo flight would have been fine. Though they will have some work to do on reliability.

No, it was a sub-nominal flight, but a successful test. (assuming they got the data they needed in order to learn from it, which is a pretty safe assumption)

Sort of, the rocket has "engine out" capability. I don't think the number/configuration is known, but it is intended to perform as desired with more than one engine disabled.

Happens in 100% of Starship launches