EmbToolkit is licensed under GPLv2, do I need to license my work with its toolchain/SDK under GPL as well?

The answer is NO, you do not need to!
You are completely free to license your work with EmbToolkit toolchain under the license of your choice.
EmbToolkit is simply a build system and toolchain provider.
Before any toolchain component integration, We make sure that this component
(as it is provided by EmbToolkit, ie. without modification on your side) can be used in proprietary software development environment.
However, on your side, when you expand EmbToolkit with third party softwares, make sure that they meet your software
development environment lincensing requirements.
For more details Don’t hesitate to ask at embtk-users@embtoolkit.org mailing list.

How can I use EmbToolkit toolchain/SDK in my external project?

In generated/ subdirectory you have the toolchain packaged in a toolchain-xxx.tar.bz2 file.
Just decompress it in your external project build system and add --sysroot=sysroot-yyy compiler switch to all
GCC or CLANG invocation (sysroot-yyy being the sysroot directory packaged in the toolchain).

What are all these parameters while I am trying to generate JFFS2 root filesystem for nand flash?

Please read the datasheet of the flash chip on your board to correctly fill these parameters.

Is it possible to customize how the root filesystem is generated?

Yes! However you need to do it yourself.
The whole root filesystem generation process is located in mk/rootfs/rootfs.mk
As of version 1.4.0 EmbToolkit uses OpenRC for its init scripts.
You can also customize the boot sequence by modifying OpenRC init scripts located in mk/rootfs/openrc

Which programming language is used to write the build system?

The build system is mainly written in plain GNU Make.