Does Google automatically selects the size of the ad that it puts on the website page or we have to give the space where the ad would be placed and how many ads that Google allow on the one Page of the website.
You gotta set them out as you want. Maximum 3units image/text ads + 3 units link ads + 2 search box per page
If you want to be able to add the adsense banners easily on your site I recommend you to use blogspot. They allow you to host a domain name there.
They have sizes and you have to plan out how to place them on your site. In the header, sidebar and body of the site is the most common placement and you can try different variations of ad placements and see which gives better result.
You chose the ad size, this is very basic, I suggest you go to adsense help pages, not the forums, and spend at minimum one hour reading everything you can.