Rooted means you have administrative/superuser rights to your phone.
Debloated means the apps that were put on the phone by the carrier or manufacturer have been removed. Those apps are referred to as bloat.
I'm not that up on the X2, but I believe that 2.3.3 is the most current. If I'm wrong, someone feel free to correct me on that.
Tapped from an Unbrickable DROID