The way a harddrive works is similar to that of a floppy disk. A harddrive has heads (a piece of metal with a magnet in it simplist terms) which read and write to the hardrive. The harddrive has ions on top of a disk and when it writes data it aligns ions in a specific way. When reading the read head reads the polarity (positive or negitive) and the info is sent and decoded. Now, formating a billion times (litterally) will decrease the life of the harddrive by less than .1% so don't worry because all that is happening is all of the ions are told to go to the same polarity. The only thing you should worry about is constant use causing the head (that little arm with the magnet) to actually drop. You will know when this happens...trust me! You will hear an aweful screeching and your computer won't see a harddrive so your screen will show nothing and your computer will give you a series of beeps.
EVERYTHING ON YOUR HARDDRIVE IS EARASED EXCEPT FOR THE MASTER BOOT SECTOR (which if you have Linux or BSD a part of the OS is still left, otherwise it is just factor stuff and things like that)...although it can be reconstructed the same way as when you delete a file...a simple computer forensic trick that reads for traces of where ions have been and how they were aranged. Don't worry about formatting, it won't kill your harddrive and it is not the actual cause of bad sectors...use is the cause of that and sometimes reformating can fix that, but I would just say don't put data there (scan disk regularly and it will cordon off bad sectors so that they aren't written to that way you won't write to them unknowingly and lose info!).