The Ofunehiki is an emulation of the original Ojoshi-sama sacrifice, in an attempt to quell the wrath of the Sea God.
The people of the Shioshishio and Oshiooshi used to take turns providing for the Ofunehiki, but in recent years (pre-ep1) they stopped doing so because the growing animosity between the sea and surface people (evident when Hikari calls a meeting and they end bickering).
In the anime things go out of control because the sea god is very wrathful-ish. My guess is that when Uroko says the Ofunehiki is useless, it is not because it held no power, it is because a poorly-executed ofunehiki would do no effect on the sea god feelings dissolved in the ocean. (lets assume Uroko had very little faith in Hikari).
The wooden maidens (more so the living ones) are very desired by the Sea God, in an attempt to fill the void left by the departing ojoshi-sama. He would gather the fallen wood figurine and guide it to the graveyard with the currents.
There are 16 sea villages around Japan (they also do not care to say what about the rest of the world, but there is a lot of sea out there). It is said somewhere near the end of S1 and the beginning of the S2. If they all hold Ofunehiki or if they have their own version of Uroko-sama is not stated in the anime series.
There is also no reference as to how long Ofunehiki is being held. But you can expect "for centuries" as a good measure. The Ojoshi-sama was a real person, and the sea people are all her descendants, so we can think of an adam-eve kind of timeframe, for her existance to fall into a (almost forgotten) legend.