Yes, an au pair is basically a live-in nanny. We have daycares, here, but I have baby twins. It is about half as expensive to hire an au pair as it is to put two babies in day care. And her hours can be more flexible than daycare. And I don't have to get everyone out of the house in the morning.
The requirement is that you have an extra bedroom for the au pair.
The agency we hired her through did an orientation with us. They were fairly adamant that during her scheduled hours, you only ask her to do child-care related activities to include cooking for kids, laundry for kids, etc. But the idea is that she is assimilating with your family. And you are providing her room and board. It is reasonable to expect that she will help out with some cooking and cleaning. This, of course, depends on the personality of the au pair and how well she fits in with your family.
I find myself not wanting to treat her like a maid, so I am hesitant to ask her to do much outside of childcare. I find myself thanking her emphatically as she ends up doing most of the dishes a few nights a week. She rolls her eyes at me and assures me that she lives with us, so, of course, she is going to help.