AE stands for accelerated/enriched. And I think your D is accelerated by two years. Algebra is normally a 9th grade subject.

As to whether it is necessary for competitive colleges, I think it can help, but it's not necessary. Without it, your child just needs to find another way to shine. For example, D's best friend's older sister was accepted into Harvard without qualifying for the 1% math group. With our kids, D didn't qualify for it, but S did. We will see what happens with they apply to college.