Always-On Configuration Clarifications
Be careful with the term Always ON, This refers to Always On Failover Cluster Instances and Availability Groups (Also database mirroring but this is deprecated). FCIs and AGs are very different technologies. 

To answer your question AGs can be installed on stand alone and clustered instances. It all depends on your HA/DR requirements.

2nd question: 
Yes AGs can automatically failover their databases to other SQL instances (refered to as nodes). The servers running the SQL instances all need to be in the same windows failover cluster.

This white paper from Microsoft might be a good place for you to start reading on AGs.