Yes.
What's the mechanism, and is it based on use, or just time?
Use. As others have said further up the thread. Read/Write cycles.
I always format my cards after I have downlaoded teh images ( and confirmed they have been downloaded). Is this still good advice, or could teh act of formatting accelerate the wear/failure process.
If you format in camera, it's not actually formatting all the card's sectors, so no, it will not wear the card out. If you did a full format via your computer, then yes it would reduce it's life cycles. This also stands true for SSD drives in computers. You should not unnecessarily format them. You should also turn off things like indexing that are constantly reading the drive.. it's not needed with a SSD anyway as they're fast enough to bring up a full directory without caching anything. Using a SSD as a scratch disc will also lessen it's life. However.. that's worth it. SSDs are cheap these days, as are SD and CF cards. The card should still outlast your camera even if you do a full on format every time you download, so don't worry about it.
If a card fails, it will probably be due to fault rather than natural wear. Failing sectors will not necessarily make the card fail. Most OSes (including those in cameras) will reallocate cells as they fail, so you'll start to get unreliable behaviour quite some time before a card dies of natural causes. Outright catastrophic failure will be the result of a fault, not part of the card's natural demise through use.
Either way... any odd behaviour, I'd first try another card in the camera to establish where the fault lies - the camera's card reader, or the card itself. If it's the card, remove it, place it in the nearest bin, and buy another one. They're cheap.
If your card has 2 slots... use one as back up of the other. Cards do fail. I've had a few card failures over the years, and when they happen in single card cameras or when you have the second slot set to overflow, you've lost everything on that card. You have a D800 though.... so set slot B to back up slot A.