1. AC is continuously changing in a sine pattern, from 0 to the positive peak, back down to 0, to the negative peak, back up to 0... over and over at the frequency of the signal. What do you propose to display as the "actual voltage"?
A. The positive peak?
B. The difference between the peaks?
C. Or the voltage that if it were held constantly, would supply the same amount of power?
RMS is option "C". It's not more correct than the others, but it is the reading that every multimeter gives you. Finding options "A" and "B" requires an oscilloscope.
"True RMS" means that this reading (the voltage that if it were held constantly, would supply the same amount of power) will also be correct for signals besides sine waves (square or pulse waves or harmonic sums of sines). It doesn't refer to anything else; there is no difference whatsoever with respect to measuring sine waves between "True RMS" and other multimeters that don't have it ("clean" AC power is a sine wave).
2. This depends on your circuit, but is often caused by the probes not making a perfect contact.