To make a idli, you grind rice and lentils with water and let them ferment overnight. Then you take the batter and put it into metal molds that you place on the stove in a pot with a little bit of water. The liquid water becomes steam, which cooks the idlis.
Yes! Rice is one of the most common crops in South India. A lot of the food eaten here is eaten with rice. An idli is a new way of preparing rice that creates a totally different product.