What is AMM?
Also called: automated market maker
An AMM is an exchange that prices trades with a formula against pooled reserves instead of matching buyers to sellers in an order book. Anyone can supply the liquidity it trades against.
In practice
The constant-product design that Uniswap popularised means price moves along a curve as reserves shift, which produces slippage on large trades and impermanent loss for liquidity providers. Later designs concentrate liquidity into price ranges to improve capital efficiency.