Okay I might sound like a bit of a noob with this question, but I read about AoE grinding all the time, what/where is it, is it a BG, flame me if you like, I would just like to know.
It refers to causing damage to multiple enemies at a time rather than just focusing on a single target. Typically when people (besides paladins) think of AoE they envision caster-types like mages or warlocks raining fire or ice down on a group of enemies.
In the case of a paladin - you basically are causing the enemies dmg by them hitting you and simply outlasting the damage. For instance, retribution aura, blessing of sanctuary, a shield spike and holy shield all cause (or have the chance) to cause damage to multiple enemies if they are all pounding on you at once.
To effectively AoE grind you want to find a group of mobs that don't have a lot of ranged attacks that you can gather up in a tight little angry circle and have them pummel themselves to death on your paladin spikiness.