They used to be more common than they are now - the cutbacks have cut back what LA's are prepared to pay
It's a means tested allowance for children who are hard-to-place (it's a requirement that the child be a hard to place child to recieve AA), based on fostering allowances. Each LA will have different requirements for who can recieve it (ie. what they count as hard to place, or deserving of an allowance), and each one pays different amounts of it! Some LA's pay far less than others
Statutory guidance says that the maximum that could possible be payed in AA to anyone would be the LA's core fostering allowance plus any enhancements this particular child would have got in foster care. But LA's can set less than that level as their maximum, and that's the absolute maximum, the means testing of parents means that very few people will get the maximum the LA is willing to pay.
I get it for my DD2, a little under £500 a month. Thankfully because of her high needs, which were recognised before placement and they were willing to give a lot of support for her, her LA agreed a set amount a month until 18. DD was placed in 2004.
A little while ago, they tried it on of course. Sent out letters to all adopters with allowance, saying they were reassessing everyone and adjusting the AA accordingly (another way of saying they'd reduced the levels they were willing to pay and were going to apply it to those who'd already adopted as well as new applicants for AA). I responded by informing then politely but firmly that they'd signed and agreed a certain level until DD was 18, and as far as I was concerned, that was the end of the matter and they'd already signed away their right to reassess me (I didn't say it quite like that, but that's the blunt way of saying it). I was actually stunned that they backed down. Pleased, but a bit stunned!
As Devora said, some agencies will pay a settling in grant to help with essential items, this is more commonly going to be for sibling groups