Can I save to memory sticks for read and write access?

I use M.S. Office for Mac to do my admin. I would be very grateful if anyone can help with my queries.
I want to save work to media that allows me read and write access. Saving to discs (of any type) does not allow any editing.
1. If I save to a memory stick will I be able to save and update my work when I want to?
Also;
2. Would a memory stick have to be formatted with to be suitable for Mac?
3.If the memory stick can be used for the purpose, I want to encrypt it; how would I do this please?
4. Would encrypting place a limit on the capacity of the memory stick that can be used, e.g.  I have a choice, including 8Gb and 16Gb.
5. I have heard that passwords can be created by Mac; what is the method for doing this please?
Many thanks for in advance.

There is terminology here I am unfamiliar with. I feel I have embarked upon a complex path.
I do not know what HFS+ is.
HFS+ is the Mac OS X file system.  Hierarchical File System Plus (Plus as it used to be HFS, but then they improved it and said +)
By default a USB flash drive generally comes formatted with FAT (from the Microsoft MS-DOS days, but is a universal format - it might come with FAT32 or exFAT as well - still from Microsoft).  Mac OS X can read/write these, HOWEVER, its FileVault whole disk encryption is only designed to work with HFS+, which is why I mentioned it.
Applications -> Utilities -> Disk Utility can be used to reformat a disk, USB Flash drive, etc...  NOTE:  reformatting does erase everything on a disk, so keep that in mind.
What is the difference between File Vault and .dmg in disk utilities?
FileVault is whole disk encryption.  Everything on the disk is encrypted. and you need to enter the password just to mount the device.
A .dmg file is a regular file that happens to contain a file system inside of it.  When you double click on the .dmg file, Mac OS X will mount the file system inside as if it was a disk.  If the .dmg file is encrypted, then you will be prompted for the password before Mac OS X will mount it.  A .dmg is just a container for a file system.  Inside that contain is a full file system with files and directories just like any other file system.
You can create read only .dmg files, you can create read/write, you can create sparse (you declare the maximum side, but the initial size of the .dmg is small and will grow to the maximum size as you add things to the .dmg, you can create encrypted .dmg.
Since a .dmg is just a file with no special attributes on the outside, it can be copied around.  You can copy it over the network, you can store it in the cloud, you can put it on a USB Flash drive, you can put it on an external disk, etc...
If the device you put it can be mounted by Mac OS X, then you can double-click on the .dmg and it will mount the file system inside the .dmg and you will be able to access the files in the .dmg
This even includes USB Flash drives that use the FAT format family.  But you existing external disks can be used for that as well.
If I used an external hard drive for the purpose I have in mind, would the  disk .dmg utility allow me to access folders and files for editing or should I approach the task in a different way?  I would still wish to encrypt.
As I said above, the .dmg is a full file system where you can store files and folders inside a .dmg container file.  And you can encrypt the .dmg so it is secure.

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