AED - Automated External Defibrillator. They're portable device defibrillator which can deliver an electric shock. As I understand it, it detects an abnormal heart rhythm and shocks the rhythm back to normal. Note that there are some situations where they will not work. (For example, Pulseless Electrical Activity or PEA is "non-shockable.")
Correct. The shockable rhythms are ventricular fibrillation and ventricular tachycardia (racing heart). Fortunately these rhythms occur in many heart attacks.
Unfortunately PEA and asystole (flatline) do too, and shocking won't fix those -- despite what movies and TV would often have you believe.