Yes, that view was based on ignorance of how conception worked. The ancients (and not so ancients) could see the male contribution to the birth of a child, but made the assumption that the woman simply bore the "fertile soil" for the seed to grow.Usually, I think, the man provided the “seed” for the baby.
That's why "her seed" was so unusual.
Yes, a physical descendent.Regardless, “seed” means descendent. Jesus was born of Mary, He is her descendent.