Air Defenses can only target and shoot one air troop at a time.
It cannot harm ground-based units, or interfere with them in any way other than potentially distracting them from attacking a more valuable target (e.g. the Town Hall).
The Air Defense has an excellent range and a very high damage per shot. As the in-game description states, it's best to position them so that they cover as much area as possible. One common strategy for Town Hall 8 and above is to position them in a wide triangle (or diamond, once the fourth Air Defense is available) around the Town Hall.
The Air Defense is a popular first target for attackers via ground troops as they are the only defensive structure that cannot target them. Make sure they are defended well, and they will help to keep the skies clear from rampaging Balloons, Dragons, Healers, and Minions. Air Defenses are there for when Archer Towers and Wizard Towers just won't cut it (and they usually don't, for air units at least).
If possible, keep your Air Defenses behind your first lines of defense (i.e. behind Cannons and Archer Towers), preferably with a Wall in between. This will prevent a large Giant or Golem assault from quickly destroying the Air Defense and allowing a Healer to be deployed early in the battle. The longer it takes the Giants to destroy the Air Defense, the more time your turrets will have to thin out their ranks before the Healer is deployed.
The Air Defense is a natural target to attack first, as clearing them helps pave the way for an air assault. Healers are very vulnerable to the Air Defense so it is a good strategic move to destroy this building with Giants before deploying her. They are easily destroyed by any ground-based troop type.
It is advisable to keep Balloons away from an Air Defense, as they are capable of destroying Balloons in one or two hits from a great distance.
Although Air Defenses are quite effective against Dragons, it is possible to keep an Air Defense occupied with a Dragon or two long enough for a fleet of Balloons to quickly destroy a majority of the ground defenses.
A great way to overwhelm the Air Defense is use a large group of Minions since the Air Defense can only target one air unit at a time.
Air Defenses undergo significant visual changes at levels 4, 7 and 8.
When initially constructed the Air Defense consists of a single wooden launch tube with a single red-and-black rocket. The launch tube is banded with metal.
At levels 2 and 3, an additional red-and-black rocket is added to the launcher.
At level 4, a second wooden launch tube is added, with two rockets in each tube. The rockets change from red and black to yellow and black with black tips.
At level 5, the Air Defense adds a fifth black-tipped rocket to one of the launchers.
At level 6, the Air Defense adds a third wooden launch tube with 2 black-tipped rockets in each tube.
At level 7, the three launch tubes are replaced with a single large wooden launcher with five black-tipped rockets in it.
At level 8, the Air Defense's launcher receives a coat of red paint, along with dark metal bands and golden rivets. It is filled with four larger black-tipped rockets that are painted in a yellow and black chessboard pattern, similar to that seen on the V-2 Rocket.
The rockets in the launcher have the visuals of fireworks. When they explode, you can see a small show of lights if you look hard enough.
From level 1 to level 6, the number of rockets in the Air Defense's launcher corresponds to its level. Beyond level 6, however, each level actually removes one rocket.
The visual representation of rockets in the Air Defense's launchers does not represent the amount of ammunition the Air Defense contains. The Air Defense has unlimited ammunition and will continue to fire as long as the enemy has any surviving Air Troops in range.
In most English-speaking countries outside the United States, the Air Defense is called the Air Defence.