Terminology conventions

What does the “S” mean in SWEP, SNPC and such?

So “Scripted Weapon” and “Scripted Non-Player-Character”.

Does that mean you can use the weapons, and the NPC’ will act accordingly, like attack if enemy and follow if friend?

All it means is that you can make your own NPCs and weapons through scripting.
What they do and how they act is determined by the script.

you can script your own AI for npcs