Breastfeeding doesn't just provide calories it also provides antibiodies, plus extended breastfeeding is largely beneficial to the mum's health (cancer prevention). Formula doesn't have any of the additional benefits, so that is why it is advised to move away to other milks after 12 months.
The above, but also because when they are having 3 meals a day they don't need additional formula as that's like a food in itself. Can offer cows milk or water instead as more of a 'drink' than a meal.
Because breastfeeding offers benefits other than nutrition whereas formula doesn't really. I've never heard of having a hard stop of formula at 12 months but perhaps it's worth slowly phasing it out in favour of solids, given that, as I said, its purpose it purely nutritional.