Since you are referring to your plant as a Bay Tree and not Bay Laurel I am going to take a wild guess that you are in the British Isles. All Bays get some yellow leaves eventually. It's just old age. Even evergreens have to shed their leaves at some time. But they should not get a lot. As long as you feed the plant it can live in quite a small container but I wouldn't put it in anything less than a 5 litre pot. Repotting every few years will help.

You can use the leaves at any age. But they dry better when they are mature and leathery rather than still soft and newly unfurled.

Water it when it needs it. There's no timetable we can give you.

If you have space you could plant it in the ground where it will not need any care at all except pruning to keep it a to a size you want.

Ok. I'm actually not in the British Isles, but I did not know that they are also called Bay Laurel. Thank you.

Oh, ok. I am in UK and we just call it Bay. US posters seem to call it Bay Laurel. All my comments related to British Isles conditions. You don't say where you are so we can't tell you if bay will be hardy for you. A picture of your plant and your location would help us give better targeted advice.