Tightening Garden Hose to Hose Reel

Actually, it sounds more like a siphon or vacuum breaker working fine. It's not leaking with pressure on. When you turn off the sillcock and release pressure on the hose, it moves the water in the hose away from the sillcock, creating a vacuum at the faucet, which causes the siphon breaker valve to open. Then the water rebounds a bit and some comes out. They have only failed when they leak under pressure, or do not open at all. The brass cap thing on top of this sillcock is the built-in vacuum-breaker. The type described in Steven's answer seems more likely given where you say water is coming out. In either case, I don't see any sign of failure from your description of the behavior.

It's difficult to answer this question, without actually seeing the plumbing leading to each fixture. Reductions in pipe size, differences in pipe material, pipe length, number of elbows/tees, etc. These could all contribute to a reduced flow.

If you had a leak large enough to reduce the flow by half, you'd likely either notice it as water damage, or on your water bill. Reduced flow being the only symptom, a leak would be low on my list of things to check.

I'd likely start with the sillcock itself, to make sure it's operating properly. If the valve isn't opening all the way, or it's gummed up with junk, you'd definitely see a reduction in flow. Turn off the water to the fixture, and remove the sillcock.

NOTE: That's a frost-proof anti-siphon sillcock, so it actually connects to the supply plumbing somewhere inside the house. So you'll want to have a bucket under that joint, to catch any drippings when you remove the sillcock.

If everything checks out there, start working your way back along the supply. Look for pipe size reductions, material changes, stuck valves, or any other potential restrictions.