When you open the Audio Mixer, you see a collection of "channel strips" constituting the mixer. All these channel strips are Audio Objects. And the other way around: every Audio Object is a channel strip.
Audio Objects are at the core of Logic's functionality: they allow you to take input from your soundcard, record this input as a file to disk, play the file back through your soundcard's outputs, have the audio being processed by effect plugins, et cetera. A good understanding of what the various Audio Objects are intended for and what they are capable of is thus crucial to understanding Logic.
If for some reason your default song doesn't contain all the objects you need, there are various ways to create a new Audio Object.
Many Logicians seem to think that the Audio Mixer is somehow a "special place" with "special features" or something. Well, it is not. The Audio Mixer is just another environment layer with no special properties whatsoever. In the Audio Mixer window you see a rectangle at the left hand side, with the word "Audio" in it. Click-hold on this rectangle and a menu will pop up that allows you to navigate to other environment layers. We will not go into the details of the environment right here and now, but it is relevant to point out that these layers are in principle "all created equal". That means that you could select a couple of channel strips in the Audio Mixer, 'cut' them, move to another environment layer, and paste them back in. You would now effectively have distributed your mixer over 2 (or more) layers without any loss of functionality. Now you may not find that handy (I know I don't, usually), but it's still relevant to know that it's possible at least.
Now suppose you don't 'cut', but 'copy' a few channel strips instead, and then 'paste' them some place (i.e. on the same or another environment layer). What's up then? Simple: you have just created identical copies of a few Audio Objects. If the original Object's meter moves, then so will the meter of your copy. If you drag a fader on the copy (or the original), then the fader on the original (or copy) will move as well. You can delete the copy (or the original), and still have access to all of the Object's functionality by using the original (or the copy).
Suppose you have 10 tracks with drums, in a 25-or-something-track song. All the drum tracks have their output set to the same Bus object, which is used as a submix. That way you can adjust the volumes of the individual drumsounds, and have the Bus function as a master fader to control the volume of the entire drum-group relative to the other tracks.
Now having an Audio Mixer with 27 objects (25 Track objects, one Bus Object and an Output Object) is clumsy, and might not even fit on one screen. A possible approach would then be the following.
Move to the screenset with your Audio Mixer. Make sure "Protect Cabling/Positions" in the window's View menu is unchecked. Select the 10 Track Objects with the drums and drag them down, so they end up way below the original Audio Mixer. Select the single Bus "submix" object, 'copy' and 'paste'. Drag this copy down as well, and align it with the 10 Track Objects you previously moved. Since you've removed 10 objects from the top row, you'll now have a large gap in your mixer: select all objects to the right of this gap, and drag them left to close the gap. Resize and scroll the window so that only the top row of the mixer is in view. Now go to a fresh screenset, open the Audio Mixer once more, but this time scroll/resize the window until just the 10 Track Objects and the submix Bus are visible.
What have we gained? The screenset that shows only the drums-stuff allows you to tweak the individual drum volumes, without being bothered by non-relevant other tracks (which you might have muted at this point). Having the submix Bus there is handy, since you might need it to e.g. control just how much of the total drums-signal you send to a reverb.
Once the submix is okay, you move to the first screenset showing the other tracks plus (again) the submix Bus. Now, with all tracks unmuted again, you can start working on the final mix. The 10 drumtracks are not in the way, since you moved them off-screen, but the Bus is still there: after all, you need to be able to control the overall drum-volume when doing your mix, right? Not having a duplicate of the Bus Object would make this enterprise rather inconvenient, and would probably involve a lot of scrolling in the Audio Mixer. Having 2 screensets with 2 dedicated mixer setups sure beats that.
A picture is worth more than a thousand words, so here they are, in all their glory, with their parameter panes shown below.
From looking at the picture it will be clear that the only thing that distinguishes one Audio Object from another, is the "Cha" parameter: that is what determines the 'kind' of Audio Object you have.
General purpose: assign it to a track in the Arrange window, and put a piece of audio on the track.
Cha parameter: Track n
Input: either a physical (soundcard) input (through the Input popup), or audio data on an Arrange track, if that track is assigned to the Track Object.
Output: a bus or a physical (soundcard) output.
Inserts: yes
Sends: yes, to a virtual bus
General purpose: assign it to an Arrange track containing a MIDI sequence, and insert a virtual instrument (VSTi) in the object.
Cha parameter: Instrument n
Input: A VSTi. The Object is assigned to an Arrange track that should contain MIDI sequences. Upon playback, the MIDI data causes the virtual instrument to generate audio data.
VST effect plugins that are capable of responding to MIDI data (such as e.g. Antares' AutoTune) should also be inserted in an Audio Instrument's Input slot. The controlling MIDI data is put on the Arrange Track assigned to the Instrument. The audio to be processed is put a separate track (assigned to a Track Object), and in the effect's interface this Track Object is picked as the Side Chain input for the plugin.
Output: a bus or a physical (soundcard) output.
Inserts: yes
Sends: yes, to a virtual bus
General purpose: takes its input from one of the virtual bus-nodes. Used for e.g. sharing effects like reverb between multiple tracks (thus saving CPU cycles, since you only need 1 instance of the effect).
Cha parameter: Bus n
Input: None. The input source is a virtual bus, and is determined by the Cha parameter.
Output: a bus or a physical (soundcard) output.
Inserts: yes
Sends: no
General purpose: a combination of the Bus Object and the Input Object, with a twist. Also used in combination with virtual instruments with multiple-output capabilities. For details, please read the chapter "Inserts, Sends, Busses and Aux objects" of this FAQ.
Cha parameter: Aux n
Input: A physical (soundcard) input, a virtual bus, or a VSTi output if some VSTi is inserted in Multi Channel mode in an Instrument Object.
Output: a bus or a physical (soundcard) output.
Inserts: yes
Sends: yes, to a virtual bus
General purpose: used to route your soundcard's inputs "live" into Logic.
Cha parameter: Input n
Input: A physical (soundcard) input
Output: a bus or a physical (soundcard) output.
Inserts: yes
Sends: yes, to a virtual bus
General purpose: the link between Logic and your soundcard's outputs.
Cha parameter: Output n
Input: None directly. However, every object whose output is routed to e.g. Output 1-2, will show up at the Output Object whose Cha parameter is set to "Output 1-2". Note however that even if no object has its Cha parameter set to "Output 1-2", all output from objects routed to Output 1-2 will still be heard. I.e. you don't need to have an Output Object in order to hear output from other objects. However, not having such an Output Object is silly, since you won't be able to adjust volume on the output, or insert mastering effects in the Output channel strip, or bounce the output to disk.
Output: a physical (soundcard) output, corresponding to the Cha parameter.
Inserts: yes
Sends: no