Given all the preset block time, could some one kindly advise how crypto exchanges go about handling the instant transfer of crypto pair between buyers and sellers? Do the trades and the change in cryptos as a result of the trades just resides on database server within the centralize exchanges?

How does exchange go about handling withdraw from clients? Do they have hot wallet to keep a float to allow for instant withdrawal when requested? If that's the case, how can they ensure they don't over/underestimate the required float?