In the book basic electricity it says "a variation of the revolving armature AV generator is often used for very low power (e.g. An automobile alternator) where both windings are interlaced on a stator and the fields are coupled by a rotating soft iron (electromagnetic) armature without windings."

I don't understand what they mean by both windings, and why are they interlaced. Also, how does the armature have no windings and what do they mean by "electromagnetic"?

 

Both too simple and too complicated at the same time. Too simple if you know the answers and to complicated if you don't.

First, in this case, "electromagnetic" means anything that can be magnetized. A moving magnetic field caused by electric current can magnetize the rotor, and so can a moving metal magnet.
Second, any current flow anywhere causes a magnetic field and any moving magnetic field will cause a current flow in a nearby, closed loop of conductor. In this case, the rotor is capable of being magnetized. One winding of wire is given a current to magnetize the rotor. When you rotate the magnetized rotor, it produces a moving magnetic field, and that stimulates the second winding to produce current flow. The two windings are interlaced because it is convenient and efficient, but this "generator" will still work if the two windings are completely separate from each other.

"Both windings" means there are two windings. The armature (which I have been calling a rotor) has no winding because it is only there to carry a magnetic field.

Look at the fan motor out of an air conditioner (one capacitor) or a bathroom fan (shaded pole). Both of them have a rotor with no windings. The stator windings both magnetize the armature and push against that magnetic field to make the armature rotate.

This is not the whole answer. The "whole" answer would require quite a lot of writing. This is what I can do right now. You can ask more questions and/or somebody else will jump in and elaborate a bit.

 

Normal auto alternators have a wound field on the rotor,fed by sliprings,& multiple windings on the fixed part of the device.

The rotating magnetic field induces currents in these windings.

Some more modern units use permanent magnets on the rotor,so have no sliprings.