The island runs roughly 20 kilometres from northwest to southeast and is nowhere more than about eight kilometres wide. Marstal, at the southeastern end, is the largest town with 2,111 people and the island's commercial and shopping centre. Ærøskøbing, with 942, was historically the chief town and remains the main ferry port, its narrow lanes lined with 18th-century houses. Søby, up at the northwestern tip with 438 residents, is home to the island's shipyard, Søby Værft. Fourteen villages and a scatter of farms fill in the rest, and the island's total population is 5,956. Everything here is within a bicycle ride of everything else, which is not a tourist-brochure flourish so much as a description of the road network.

The countryside is mostly gentle undulation, until the west coast drops. At Voderup Klint a stretch of 33-metre cliffs runs for several kilometres above the water — the one genuinely dramatic edge on an otherwise soft island. Ærø is part of the South Funen Archipelago and gets the archipelago's favoured weather: more hours of sunshine than the Danish average, and year-round temperatures a few degrees above the national mean. Traffic is thin enough that hikers and cyclists have effectively taken the roads. Anglers work the beaches; so do painters, and they have been doing it for a long time. Carl Rasmussen, born in Ærøskøbing in 1841, made his name painting the sea and the Greenland coast.

People have been living here a very long time — excavations put settlement on the island before 8000 BC. The stretch that shaped modern Ærø, though, runs from the 14th century to 1864, when the island was repeatedly united and re-divided among the duchies, chopped into a shifting pattern of enclaves. In the 20th century it produced its own quieter history: Hermann Møller Boye, born in the village of Rolpested in 1913, joined the Danish resistance and was executed by the German occupation in 1944. Administrative unification came late and by choice. An island-wide referendum backed merging Ærøskøbing and Marstal municipalities, and on 1 January 2006 — a year ahead of Denmark's nationwide local government reform — Ærø became a single municipality.

For a place with fewer than six thousand residents, Ærø has an outsized reputation in energy engineering. Three district heating systems on the island run on solar collectors, and the plant at Marstal — after its most recent expansion — is the largest solar collector array for heating anywhere in the world. Then there is the ferry. Since August 2019 the route between Søby and Fynshav has been worked by Ellen, a lightweight car and passenger ferry that runs entirely on battery-stored electricity, built at Søby Værft on the island itself and funded in part by a €17 million grant from the EU's Horizon 2020 programme. Her charging power and operating range pushed well past what electric ferries were doing at the time. An island that once exported captains now exports a working answer to a hard engineering problem.

Ærø is the only one of the larger Danish Baltic islands with no bridge to anywhere, and the islanders have shown no great appetite for changing that. Four ferry routes serve it: Fynshav on Als and Faaborg on Funen both land at Søby, the twin ferries Ærøskøbing and Marstal run from Svendborg into Ærøskøbing, and the Marstal–Rudkøbing crossing to Langeland — suspended after January 2013 — has been running again since 2019 with the ÆrøXpressen. There is a small airport with grass runways near Marstal, and the surrounding archipelago is one of Denmark's best-loved sailing grounds. Near the middle of the island, at Olde Mølle on one of its higher points, the sculptor Erik Brandt installed a bench meant for sitting and looking out over the island and the sea while thinking about world peace. Readers of Kristeligt Dagblad voted Ærø Denmark's third most wonderful island in 2010, behind Fur and Læsø. On the evidence, the bench is well sited.