Hi Bonnie. Yes, an AP will get you into all four parks, and you can hop as much as you want. When you purchase your original AP, you get a voucher that you than activate as an AP when you're ready to use it. Your one year starts from the first day you use it. You actually get 366 days out of it. For example, I activated my AP on 9/13/02 and I can continue to use it through 9/13/03. The rules are different for a renewal of an AP. Those start immediately. So when I renew my AP, even if I don't go to the park until 10/01/03, it will start on 9/14/03.
There are also Premium Annual Passes that will get you into the water parks and PI.
As an AP holder you get a quarterly newsletter that will let you know of new happenings and special AP only offers. There are often special hotel rates for AP holders, and occassionally they will hold special events. In March they had 6 nights where MGM was kept open an extra two hours just for APers to ride RnR and ToT.
There are other discounts as well, although the number of offers has declined through the years. Right now we still get 10% off purchases at the World of Disney, I think there are specials on miniature golf and regular golf, things like that.
If you're going to spend 8 or more days in a year at WDW, then an AP makes sense. Although I've found that I use it as a license to make more trips to WDW than I used to!