Where does all the fluid in my hydrocele come from?

See below. Hydrocele fluid is secreted and reabsorbed by the hydrocele sac. When there is less reabsorption (for example as a result of inflammation), the fluid accumulates and over time the increase in size becomes visible.
Yes. Hydrocele fluid usually comes from fluid that leaks down into your scrotum from your abdomen. Your abdominal compartment makes liters of fluid a day and if there is a connection to your scrotum, some of this fluid leaks down. Surgery to close that connection is the only way to stop that continued fluid leak.