This feature is available in all editions.
I see capacity in different places in the application. Can you give me a quick rundown of where this can be defined and the purpose of each?
Project (or Release) level capacity can be defined in terms of Target Swag or Target Estimate for a given project (or release). This value is used in Release Planning as a means to provide an initial target that the teams feel is reasonable within a defined release timeframe. The Release Planning view shows the amount currently planned in a release vs. the target capacity defined for it. The Project Quicklist report can be used to view the capacities, including across the set of projects/releases in a selected program.
If you are using the optional Teams feature, Team level capacity is defined as a value on the team and expressed in terms of estimate per sprint. It is used in Release Planning as a means to confirm that the amount planned for a given team within a given release is reasonable. That view also calls out any work allocated to the team in any other overlapping release (i.e. without regard to a specified program) to present a true picture of the team's workload.
Individual Capacities are primarily used for sprint-level planning and can be viewed in the Sprint Planning > Capacity page.