Well, I won't pretend to know exactly what goes on when you format these things. I guess it divides the memory in little sectors, and possibly marks bad any duff ones. But you can format them, and it does delete all the data on the card when you do it.
As to their lifetime, I think they average around 100,000 read/write operations. It sounds like a lot, but I guess you can easily rack that up over a 3 year period, particuarly if you take your camera most places you go and snap at lots of things.