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Not a network engineer, but I've spent enough time in IT operations to have a decent idea what they do. It's more like "users/customers can't get to x or are having flaky issues, figure out why" and then troubleshooting what piece of equipment is failing or what configuration on a router needs to be fixed. Network engineers aren't bouncing services (sysadmins do that), and they definitely aren't usually tracing cables (they could, but it's more cost effective to have a low level tech do that while the senior guy troubleshoots the hard stuff).
More or less the former. Being an expert at network infrastructure doesn't mean you're an expert at storage or anything else, so people tend to stay in their lane. Obviously these are smart people who could do those things, but may have no interest and would probably have to take a more junior position to switch specialties like that.
It's exactly as you guess. A small business may well have a jack of all trades tech guy (and some people prefer to work there so that they get the variety), but at larger companies you have specialists. You have data center techs (racking servers, running cables etc), virtualization guys, storage guys, Active Directory guys, security guys, network guys, phone guys, application-specific guys, DBAs, all that sort of thing. In a healthy company all these teams work together as one big team, but yeah at the end of the day it's teams of specialists. And it's more lucrative to be a specialist, as you might imagine.
I used to work for Charter Communications (the cable company/ISP), specifically in the division that ran the residential network. For something that size, even your network engineers had various specialized areas. You had one team maintaining the nationwide backbone, another which maintained the regional networks connected to the backbone, another which maintained data center networks, and another which handled the part of the network where it transitions from Ethernet/fiber connections over to cable. That was just for residential, there were entire other divisions of the company handling business class service and internal networking that served employees. Long story short, in a large business there's a lot of specialization going on.
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