An heir is the person who is legally situated to receive some or all of your assets upon your death. Who is and isn't your heir depends in part on the laws of the state you live or die in, because each state does define heirs in a slightly different way. You can also identify your own heirs via estate planning documents such as wills and trusts.
Payable-on-death accounts are monetary accounts that have a beneficiary designation. That means you state on the paperwork associated with the account that the funds pass to a certain person or other people upon your death. The benefit of such an account is that the funds usually automatically transfer without becoming part of the estate or probate. The bad news is that, if you aren't careful, you can cause unnecessary confusion with such accounts.