How did this hole / hollow form within this rock?
It looks to me that there were voids in this rock when it was formed, caused by gas bubbles These voids might have become filled with sand or other friable material. Weathering eroded the side of the hollow, enlarging it and allowing any finely divided material inside it to trickle out. You should have included something to show scale, but my impression is that your rocks are about six feet tall and not very solid, therefore easily eroded. The round stones you refer to are geodes, which are hollow and usually encrusted in the inside with quartz crystals. In some parts of England they are referred to as 'potato stones', which gives you an idea of what they look like. Some recent posts on this site give you photos of them.