Can DRM-free Kindle books still be read on the Kindle app for PC?

Yes, you can read DRM free books on the Kinle app as long as they are of a supported format (mobi). You can simply drag the book into the Kindle window or if it already has the blue book icon you can just double click it to open it with the app. Formatting depends on what the converting program does, but it should stay in tact.

If you convert them using Calibre, you will create a copy so you don't lose the compatibility with the Kindle app.

About the formatting, if you use an ebook-compatible format like ePub, it shouldn't alter the document. But if you export to pdf, which uses a different layout, it may be not so obvious and introduce artifacts. It also depends on which software performs the conversion, because some may break text paragraphs and insert/remove line breaks. I have an example of an ebook with this issue.