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Booking on Venere

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I booked Hotel Hotel La Scaletta in Florence. I am a bit confused on how this works. I received this email:

1 Economy Double Room - Free Wireless Internet
Daily total

Total price : 703.00 EUR
Price, Deposit and Payment

This price is for your whole stay and includes VAT / Sales Tax.
You will pay the room price (including VAT / Sales Tax) directly at the hotel in local currency (EUR). Prices shown in the table above and calculated in the currency chosen at time of booking, are approximate and subject to change depending on exchange rate at time of payment.
1% discount offered by : -7.03 EUR
Discounted room price: 695.97 EUR

Your card will be used only to guarantee this booking and will not be charged. Pay for this stay directly at the hotel.

1.) Why does my statement only show $159.00 charged?
2.) Why can't I pay for the hotel in full today?
3.) What is the Deposit and do I get this back? Is this the $159.00?
4.) Can I cancel. It does say I can do so 3 days prior to check in, but is there a hidden charge?


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