There's a few different e-book formats, as well as common classic document formats like .pdf and .txt. Personally, I'd recommend getting an Android tablet. The benefit, as far as ebooks go, with an Android tablet is that you can download readers like Moon or Aldiko that can read multiple formats and aren't limited to reading only ones you've purchased from a specific vendor (like Kindle or Nook). Aldiko for certain allows highlights/notes, and I think Moon does too. It's good to have a few different readers installed, because depending on the reader and the format, one might do wonky things with the formatting or layout, while it looks fine in another reader. There are also a few online converters you can use if your preferred reader doesn't support the ebook format you've found (but these can make things wonky too).
For not that much cash you can find the older 2012 Nexus 7, or there's the Hisense Sero 7 Pro (a Wal*Mart exclusive). I wouldn't bother with anything lower-cost than that, as you'll have to suffer with low resolution screens which make things difficult to read, especially with smaller fonts. Samsung has a Note 7.0 4 coming out soon with a 720p screen, and it's very light and compact, has a microSD slot, and will be $200 (don't bother with the earlier versions). For $230/$270 there's the 2013 Nexus 7 (16/32gb), which has a very good processor/RAM combo, and a brilliant 1080p screen. There's the Dell Venue tablets, available in a 7" or 8", for a very good price (~$200+/-, depending on options). My tablet is the LG G Pad 8.3, which I find to be the perfect size - bigger than the slightly-too-small 7" tablets, and smaller than the too-big 10" tablets. 1200p HD screen, great processor, plenty of RAM, etc. You should be able to find the LG 8.3 for about $250 on sale from various places.
The other obvious benefit of going with an Android tablet other than a straight e-reader is that it's an Android tablet. Games, videos, youtube, Netflix, web browsing, etc. And of course, you can get .pdf editors and other such things for documents.
Don't bother with an iPad. Unless you've already got an iPhone and are heavily invested in stuff you've already purchased and are familiar with. Or you want to spend way too much to do less than you can with an Android tablet.
I actually knew there would be formats, but I haven't really even checked them out yet. If I can edit pdf's on teh device, plus make notes in ebooks, that would be ideal.
