Jim:
No stupid question, no worries.
AC/Heat was the first install we added on our IP35. We boat in the Chesapeake and the AC made the boat wonderful for the hot humid summers. Yes, AC/Heat needs to be used at the dock when plugged in. You can run AC/Heat also if you have a generator, but our boats the 32 and 35 are rather small for a genset. In 2001-2002 when I commissioned our IP35, I published a lot of photos about the installs. Look over my AC/Heat photos here and it may help you.
fhayden.com/rockhallfleet/islandspirit/modifications.htm
As for how these units work, they use sea water via a thru hull to a 110 volt ac water pump, this pushes water through the condenser where the compressor runs a closed loop of coolant exchanging the heat to the sea water. The sea water then discharges over the side via an above thru hull. Many of these units are installed behind the settee seat back cushion with the main air duct coming up into the saloon and then a duct to the bow and one to the stern.
Hayden