These tickets work like any other park ticket. Except they are valid for a full year, and they have park hopping privliges on them.
There are discounts on the purchase of them if you are a DVC member or, I believe, if you live in Florida.
There are also discounts that are valid for Annual Pass holders at various eateries and at the World of Disney in Downtown Disney. There are also occasional discounts off room rates, which are infrequent and hard to come by.