Yes, it is no different than horizontal trim at the bottom of an exterior wall for starter of the exterior siding.
Standard practice. Caulk joints fail. Cap flashing at that juncture is the only way to protect that trim and prevent leakage behind that trim board to rot out the wall below.
I agree with Marcel.
Yes, it needs cap flashing to maintain the integrity if the wood you can see and the wood you can’t see. 
Yes it should be flashed. It helps to channel water away instead of it getting trapped behind siding.It should be highly recommended.
Bunch of deal breakers.
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Only if you don’t want it to rot and let water in.
Look under flashing section of the IRC and continuity of drainage plane
I’d also like to mention that the support for that AC unit is quite a piss poor set up. Makes one wonder what else is screwed up.
I think something like this would have been more appeasing.
IRC R703 Exterior Covering [Flashing]
Flashing shall be provided for…:
…
“Continuously above all projecting wood trim”
A horizontal trim, horizontal surface, water table board, etc. may be more susceptible to deterioration due to moisture which may over time damage underlying building materials should a leak develop. Although caulking is often used at this intersection, caulk joints are susceptible to failure over time. Recommend monitoring, maintenance of caulk joints as needed, and considerations are made into adding head flashing at these junctions to protect horizontal surfaces and prevent leakage and potential damage to building materials.
or something