Charms?

You have to insert RUNEs into level 1 charms in order to complete them. For level 2 charms you have to insert completed level 1 charms. And for level 3 charms you have to insert completed level 2 charms.

Do you have to have them(charms) equipped to reap the benefits of the Charm?
and I have 2 charms with similar names( Aggression Impedance & Aggression Impedance Node) Whats the difference

Charms have two parts - runes required and the charm quest.

The first charms you find are Tier 1 (Grey) and are the easiest to complete. You need to fill it will runes of the matching shapes which can be bought from the store or found as loot. To complete the quest you need to equip the charm and do whatever it says - kill 500 goblins, 50 dark elves, activate 4 wells etc.

Once you have put all the runes in and done the quest the charm will be complete and will give you a bonus.

Tier 2 charms work in much the same way, but instead of being able to fill it with runes bought from the store, requires complete Tier 1 charms.

Tier 3 charms in turn require completed Tier 2 charms.

The charm quests get progressively harder or more of a grind as you go up the Tiers, but do provide greater benefits. Even if you don't think a lower Tier charm will give you something you want it is worth completing as it may come in useful to complete a Tier 3 charm that you do want.

Yes thats pretty much the whole thing. You do the Charm Quest, then also you do the "Socketing" and when you have it completed you equip it and then you will use the effects of it.