yeah It is used for SEO purpose.You need to create account in yahoo for your site and go to yahoo sitemap explorer site. after that just write your site's url there and submit it.yahoo will give you the code and put that code in your site.It will helpful for SEO of that site.
You can either put it on your header or upload the html file. I personally upload the file to my server.
It is similar as google meta verification.. and process is also same as google meta verification tag. It is for yahoo search engine.
Yes, it's similar to Google webmaster tool verification code for yahoo. You should add this code on header section.