AA is anti-aliasing. what is anti-aliasing you might ask? well, aliasing is essentially the jagged edges you see when you zoom in a lot on any picture, you essentially see the square edges of pixels. anti-aliasing is well, anti jagged edges. essentially it tries to smooth out the edges and make the picture look more realistic. it comes at the price of making your video card work harder for each frame. 2X, 4X are basically how much anti-aliasing you're using , the more the better, but also the harder your video card has to work.
if you want to know more, feel free to read the wikipedia article:http://en.wikipedia.org/wiki/Spatial_anti-aliasing