Yes you need wallet open to stake.
You earn 5% per year. Slightly more if you account for compounding.
Does that mean there is no maximum limit to the number of Nav coins that can exist? Is there any way to burn the coins?
You can always burn coins if you want by sending them to an address nobody can access. That is true for all cryptos.
The 5% is the maximum if all coins staked. So burned coins or offline wallets would not stake. In reality inflation is maybe half of that 5%
Even so, I believe there is no theoretical upper limit, but even with maximum staking of 5% every year, it would take 10 years from now before we reach 100m coins, and then another 10 for 200m total.
In practice, about double the time for the same amount of total coins