A clue or detail planted to point the audience toward a wrong conclusion, so the real answer lands as a surprise that still plays fair. In an argument it is a distraction from the real issue; in a mystery it is misdirection on purpose.
The phrase traces to an 1807 article by the journalist William Cobbett, who told of dragging a smoked herring across a trail to pull hounds off the scent of a hare. A screenplay does the same to its audience: a stranger held in close-up a beat too long, a suspect with a motive and a lie, a clue that fits the wrong theory.
A good red herring is fair. It is a real part of the story with a real reason to be there, and the audience reaches the wrong conclusion on their own. When the truth arrives, they can look back and see why they believed it. A clue the script never explains, or one that only works because a character hides what they know for no reason, reads as a cheat.
A red herring is a plant whose payoff is the correction. Close it: show why the suspicious detail was there, even briefly, so it is not left dangling like a Chekhov's gun that never fires. In a rewrite, check each false lead against the reveal: does the real answer account for everything that pointed elsewhere?
From an 1807 article by William Cobbett about dragging a smoked herring, strong-smelling and red-brown from curing, to draw hounds off a trail. The Oxford English Dictionary accepts it as the source of the figurative sense.
A red herring is meant to mislead and is explained by the end. A plot hole is something the story never accounts for. A false lead that the reveal leaves unexplained turns into a plot hole.
No. A red herring misleads the audience about the answer. A MacGuffin drives the characters' pursuit, whatever it turns out to be. One object can be both, but the jobs are different.
As many as the reveal can account for. One strong false suspect usually works better than several thin ones, because each needs its own reason to look guilty and its own moment of being cleared.