He could just read the manual which answers most of your questions...
the iPod can use either mp3 or AAC, but iTunes defaults to AAC (AAC is better). However, many of the other mp3 players don't support AAC for some reason. Most phone music players do though.
you use iTunes to do everything with the iPod, including ripping your own CDs. Don't buy anything from the iTunes Music Store though, all the music has DRM attached which is very bad and stops you from being able to use the music as you please.