What does provisioning actually do? I know it gives you extra points and makes it easier to hit 60k but is that it?
Having a provisioner in your party gives youa boost in points and allows for tradebale Crafting or Gathering drops to come from the NPC at the end to the provisioner. There is a chance that an untradeable Gathering hat may drop into the party loot.

Is there a difference between 1 2 3 4 5 - 20? Does it affect drops in any way?
If you are a Top 3 provisioner you get to have a chance that a seal comes from the NPC at the end of the battle. The same chance does not apply to the party. Otherwise there is no difference.

Is it true that the accessories only drop with a top 3 or that number 1 = 100% drop rate?
Is it true that some stuff only drops if your 4-20 so if your top 3 you won't get it?
No.
Is there a full list of possible loots from each location along with any pre-reqs to get them other than the standard 60k+. i.e tools / accessories.?
Not sure if their is. If there is I don't know where it is.