Mojang's introducing-Add-Ons article: they can add blocks, mobs, items, and recipes, including to existing worlds, they can be combined, and Marketplace install does not require a separate mod launcher.
Microsoft's creator docs distinguish Resource packs (look) from Behavior packs (rules). Both halves of an Add-On usually need to be active. Load order can make one pack override another - that is how the engine works, not a ranking of quality.
Player tickets on Mojira have reported Realm join or download failures when several Marketplace Add-Ons sit on a world after a game update. Those are bug reports, not a statement that Add-Ons "don't work on Realms."