Installing Corners & Field Joints

At inside corners, siding is frequently butted against a trim strip. It can also be butted against adjoining walls with a trim strip used to cover the join.
At outside corners, some builders choose mitered corners for a professional looking finish. Mitered corners are most common on horizontally applied siding and they must fit tightly for the full depth of the miter. To maintain a tight fit, the siding should be properly seasoned before installation and protected from the weather at the job site. The ends are often set in caulking compound when siding is applied.
Corner boards are a popular alternative to mitered corners. They are often 3/4 in. or 1-1/4 in. ness of the siding. Width is a matter of taste and proper proportion. Corner boards are applied to the sheathing with the siding fitting tightly against the narrow edge of the boards. Joints should be filled with caulking compound when siding is applied. Trim boards can be used to cover butt jointed siding.
The corner boards and the ends of the siding are nailed to the corner studs which anchors the wood for a maintenance-free joint. Designing roofs with an eaves overhang to protect corners from weathering also helps ensure trouble-free joints.
When butt jointing siding, cut ends at 45 degree angles to form an overlapping joint. This is particularly important for vertical installation.

Source: www.soundcedar.com

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3 questions

Epoxy: Yes - epoxy works on sills. You can even use bondo filler for cars. The epoxy the estimator stated is better.
Caulk: If the bare wood is spot primed before caulking, it will not hold moisture, as long as the wood is dry. Horizontal siding is not caulked under the laps. Caulk only butt joints (where the ends of two boards meet). Trim boards along edges can be caulked.
Paint: I have cedar rake siding. I painted with Benjamin Moore flat acrylic latex stain because the house was previously painted. The stain is a self priming product.
Sherwin Williams probably formulated a similar self priming paint

Depends on color you want

Are looking for the cedar to naturally weather and age, or are you applying a color via stained sealer or do you want to try to keep the natural color of the cedar as it appears now?
sealing it now with a clear sealer such as CWF will stop the oxidization of the wood and lock in the current color (most wood sealers will darken the wood a little).
anyway, it's probably not a big deal to seal the inner side of the wood. millions of homes have had cedar siding w/ inner side unsealed with no problems for the life of the home. cedar is, after all, naturally rot resistant

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    I mean new car has been painted in this colors. And how does this change from regular colors?

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