7.4mm kidney stone causing mild hydroneprosis in right kidney? It can cause damage to kidney?

Yes. You already have mild enlargement of the kidney - that is what hydronephroiss is. Over a long period of time, a blocking stone can lead to infections and decrease in kidney function. It is best to talk with a good urologist as to what the best plan is for your individual case - whether the stone needs to be removed, or if they are comfortable just following it over time.
Yes if untreated. Stone too big to pass spontaneously. Can easily be managed by a competent urologist either by extracorporal shockwave lithotripsy (eswl) or ureretoscopically with laser lithotripsy. Also need to avoid dehydration by getting into habit iof drinking lots of water. Cut back on salt in your diet, 24 hour urinanalysis worth doing to rule out metabolic cause of kidney stone.
Not usually. Lamb: this is a big stone and will need to be treated. The stone is blocking the passage of urine to the bladder and urine is getting backed up into your kidney. Once that obstruction is cleared, the hydronephrosis will go away. Your kidney should function normally. Lithotripsy or an in and out removal procedure are the usual treatments to get rid of the stone.