This is 100% illegal. If you only accept Medicaid patients for limited exam and extractions, then you must limit your practice of all patients on all insurances to just limited exam and extractions. You cannot discriminate treatment based on different insurances. To clarify, if you perform crown, filling, dentures, root canals for PPOs such as delta dental/cigna/metlife patients, then you must offer these services for medicaid patients too. You'll hear about ways to deny treatment such as scheduling patients 3 months out, or saying "sorry this MOD filling is too complicated, I have to refer you to a prosthodontist." It is completely legal and ethical to refer patients when you do not feel comfortable performing treatment, and this is the tactic that offices use and abuse to NOT perform low-paying procedures for patients and referring them to different offices. You may have 99 dental friends who get away with this, but you may be the 100th dentist who gets the random medicaid audit.
For your 2nd question: it is completely legal to accept medicaid patients at one office, and not accept it at another office. When you sign up for insurance, you sign up your NPI, your name, and your office location. So 1 doctor who works in 3 locations may choose to only accept medicaid at 1 location. That is normal in California.
Last questions: when you sign up for medicaid, you will receive a 60 page booklet in the mail with the rules written. There are auditors who come to your office to make sure you follow the rules, this is the same for all PPOs too.