Q.1: The dept wants to know whether you have realistic expectations about compensation for this position. Trying for >$20k over median for entry level position for institution of this type/location may raise eyebrows.
Yes, they are also trying to exploit an applicant's naiveté (although obviously this should not be taken personally). In particular, a reasonably low figure might suggest to them that salary will be a non-issue. If their resources and room for negotiation for this position are tight, it might tell them which applicant may be worth their time and which might not be worth a significant investment of time if their offer is likely to be out-matched by another institution.
Q.2: If the number was not used at all, it would likely not have been part of the application. So most likely, a very low "self-appraisal" might yield a lower offer.
That said, it does not necessarily mean you should not be modest in your self-appraisal. It is unlikely that your final decision will be solely based on salary. Money only matters when you don't have any. As soon as you have a sufficient amount, other things kick in and shape the quality of life. Friendly colleagues in the department. Overall budget situation at the university and on the state level, and projections for the next 5-10 years. Location, amenities, recreation opportunities, and cost of living in the area. How long you plan to stick around at this institution (keep in mind the likelihood of raises, which over 5 years can lift a salary to a level higher than what you may be shooting for now, risking rejecting offers that might not be quite up there from yr1). Good luck and hope this helps.