Eth does mean Ethereal, yes.
Ethereal Weapons get 50% Enhanced Damage, and Ethereal Armors get 50% Enhanced Defense.
Yes, Ethereal items will break after a while of use, but some items and Runewords, like in the case of Breath of the Dying, have the Indestructible mod, which means they'll never break. Some items also have the mod "Repairs 1 Durability in x seconds" which is more or less just as good as being Indestructible.
