Do hiring managers actually contact references?

When you submit an application for employment and it asks for references, do employers actually contact them? If so, at what point in the hiring process do they do this? Also, do they contact everyone you list (normally they ask for 3 references, in order of relevance) or do they randomly pick 1 of the 3 to call? What kinds of questions do you think they ask?

Feel free to answer this from any perspective (the employer’s, the reference’s, etc). Thank you in advance! :)