The input file is a multi fasta file. Does blastn returns one HSP per sequence? Can an HSP consist of multiple genes or a whole genome/assembly? Does it return multiple HSPs and writes them in separate lines in the output file?
It will return all HSPs with E-values below the cutoff. No, an HSP can be created only within a single, continuous sequence. Yes, a single sequence can have multiple HSPs that will be written separately in the output file.