Yes - if the one person is 21 or over (you can't do it on a child's AP).
It is not good at all WDW restaurants. It is accepted at most (not all) TS restaurants on Disney property, and most lounges, but only nine counter service restaurants. There are also 8 blackout days a year, mostly major holidays. The discount is on your entire bill, including alcohol. The automatic tip on all TIW transactions (except CS) is 18%.
You cannot upgrade to an AP or buy a TIW membership at a resort - the resort front desks sell neither of these. You can do both at Guest Services at any park or Downtown Disney.