In addition to direct damage, some weapons such as nuclear missiles can deal AOE damage. AOE is short for “area of effect”. This damage is added on top of the regular damage. The AOE radius determines how big the blast area is where ships and aircraft are affected by the damage.
AOE damage has attenuation which means the amount of damage is less further you are from the explosion. Ships and aircraft at the center of the explosion are dealt the maximum amount of damage while units at the edge of the AOE damage radius will suffer only minimal damage.