Sapphire crystals are not necessarily uniform in colour. The crystal can have “bands” of colour. From what I can ascertain it refers to the cutting style of a sapphire crystal with colour bands. The cutter places the best colour band at the base (pavilion) of the gem and let’s that colour, due to the facetting, be reflected around the gemstone. The colour is therefore seen throughout the gem when viewed looking down whereas a side on view won’t show the colour.
"Ottu" sapphires are a type of translucent whitish sapphires ("gueda") with spots or bands of blue. Gueda sapphires were originally considered worthless until Thai gem heaters found out how to heat them in a furnace to make them transparent and uniformly blue. The word "ottu" means "bet" in Sinhalese, so essentially the buyer was making a bet that an Ottu stone would heat to a nice transparent blue sapphire.
Not necessarily. They can be cut and sold as unheated, but are considered a "cheap" stone and are worth less than more-evenly colored sapphires. Most top dealers in Sri Lanka do not deal with them.