Yes as it it mixes air into the water, making it into smaller streams and thus reducing splashing.

But the real advantage is that it makes the stream much stronger with the same amount of water. If I remove the aerator from my bathroom faucets, the stream is barely a dribble. Replace the aerator and the faucet is again usable. An old faucet may be a real water hog if allowed unconstrained flow.

Yes, it usually does. An aerator breaks that solid stream into a softer, air mixed flow, so it does not hit the basin as hard or bounce back as much. With an old faucet that has no aerator, the main issue I see is a stronger, splashier stream and more water use, not damage to the faucet itself.