Allowing the use of bitcoin in a certain country does not mean that bitcoin is legal nor does it mean that bitcoin is illegal. Most countries in the world have allowed their citizens to use bitcoin
No, Legal tender means that the currency is legal, and in addition to being legal, dealing with it is binding, meaning that service providers must provide a method of payment using it and not refuse to accept it. If Bitcoin is announced as Legal tender in a country, it will be like the local currency in terms of acceptance and whoever refuses to accept it without a convincing reason may get himself into legal trouble.
What does this mean for the system?
It is necessary to modify the method of issuing invoices in all government institutions and add the option of paying in Bitcoin.
If say all the countries in the world did this? Could BTC be more controlled and centralized?
Scalability will be the problem. I do not think that the current Bitcoin network is able to handle daily transactions for all countries of the world with reasonable fees.