When I tried emailing an epub this way, Amazon messed up the conversion. I've had good luck converting pirated epubs to MOBI using an online converter so I haven't changed my practice.
I have an older Paperwhite; my GF has a newer one. I uploaded MOBIs to both last night (via USB) - it worked on hers, and they didn’t show on mine. I had to convert them to AZW3 and reupload for them to show in the listing.
(I’ve not checked, but it’s plausible my older model has more up-to-date firmware.)
No they don't use mobi. Amazon has two formats newer than mobi, AZW3 and KFX. Both support more features. Using mobi is like saving your Word docs as RTF these days.
When I tried emailing an epub this way, Amazon messed up the conversion. I've had good luck converting pirated epubs to MOBI using an online converter so I haven't changed my practice.