Only this evolved version of Alvida can reduce damage. The unevolved will perform a damage attack because it has a different special. This also means that you cannot level this Alvida's special by feeding her copies of the unevolved, fat version (through of course you'll get sockets).
This is a very good unit, consistently finding herself as a recommended team member for a lot of content, including late-game. Effectively, she allows you to survive almost any attack, gets as low as 9 CD, and she has good decent stats.
Her one socket hurts, as in - there are so many choices, and neither is perfect. Frankly, if you play the game a lot, you may find yourself getting and maxing a 2nd or 3rd Alvida because of that. Now, which socket to choose? It's a pretty much even toss-up between all the good ones (CD reduction, matching orbs, auto-heal, anti-despair, anti-lock). The only thing to note is that auto-heal works better for clearing forests of training where CD reduction is useless, auto-heal doesn't work well with units like Whitebeard or LegendCroc, and aand anti-despair is less often needed than anti-lock, and not good for Blackbeard teams. I'd suggest orbs>auto-heal>CD reduction>lock>despair here.
If you are a new player, you may want to farm her story isle to get a copy, you should get one in ~50 runs (make sure to farm on double drop or half stamina days). For raising her special/sockets wait for Alvida's Romance FN.