I have a nook color (which I happen to be using to type this reply). It's basically a tablet and I use it just as much for web surfing as book reading. It's good for both things and it's backlit so you can read comfortably in a pitch black room. Outside in the sun it can be a bit tricky to see the screen but I bought this foil or whatever that you stick on the screen and that makes reading outside bearable.
One of the very best things, in my opinion, about the nook is that I can watch movies on it. That has really come in handy when on a plane for hours and being too tired to read to fight the boredom.

If you just want a device for reading however, I don't think the nook would be the best. Battery life isn't the best... probably 4-5 hours internet surfing on brightest setting. Just reading books seems to take less energy, so it probably lasts about double that if you read only. From what I know about the kindle, it has significantly better battery life (dont know about kindle fire though).

How it works with downloading boks is very simple. You have a "shop" on the nook where you browse books and by clicking on the book you like, you download it directly to the nook. The money comes from the credit card info you type in at the Barnes&Noble website. Every book has a price listed, so that's what you pay. There are also plenty of free books and those you get the exact same way, except no money is taken off your card. Every book also has the option of downloading a free sample, so you can read a part of it before buying.
I don't know for sure, but I imagine Amazon does it in a similar way.