Is it possible for all monsters (in a 3 player game) to be in Tokyo at once? If so, how is damage inflicted? How can a monster leave if no damage is inflicted?
If there are 4 or fewer players currently in the game (i.e. not including players who have been eliminated), then there can only be 1 monster in Tokyo, occupying Tokyo City. The only way for another monster to enter Tokyo is for the monster in Tokyo to leave, and unless someone uses an ability to kick the monster in Tokyo out, then this only happens if a player damages the monster in Tokyo, causing them to yield (and hence leave Tokyo).
If there are 5 or more players, then Tokyo Bay is also available to be occupied by a single monster. If the monster in Tokyo City leaves, then the monster in Tokyo Bay moves to the City and the monster who caused the departure moves into Tokyo Bay. If both monsters leave Tokyo, then the monster who caused their departure moves into Tokyo City and Tokyo Bay remains unoccupied until another player rolls claws.