In this picture, the author was trying to prove that if you choose any two elements from a Topology $\tau$, then the intersection of that two sets is also in $\tau$. He basically proved that we can define topology by the definition of basis.
Also, note that the graphs in that picture are some regions, not the curve. The lemma tells us: If we choose any open set $O \in\tau$, then $O$ is the union of some basis elements. For example, any open set (does not matter how bad you can imagine) in $R^2$ with the standard topology is the union of some open discs.
Finally, please have a look at the example $1$ and $2$ of Munkress page $78$ (2nd edition). Here he showed two different bases $\mathbb{B}$ and $\mathbb{B^1}$ of the Euclidean topology of $\mathbb{R^2}$ as the collection of circular regions(interiors of the circles) and Open rectangles.
Answer to the last question:
Yes, any element of the basis $\mathbb{B}$ is open. More importantly, the rest of the open sets can be created by the union of the basis elements of that given basis $\mathbb{B}$.