Can someone describe how publishing an Adobe Air file on Android works?

I'm familiar with Adobe Air and I noticed it is on the Market. Does it accept .AIR files for install? If so, how does Air make adjustments for the small screen? Does air have access to all the neat features of Android? Such as access the contacts or the SD card? Need some help understanding how my Air application will perform on Droid. Should I still develop Android specif apps, or is Air ready for prime time?