I wish they did return to again manufacture this unit - it was simple to use and had functions that the later units don't have. I have attempted to source a replacement, but if available privately, are costly!
All the books that you buy through Kindle (Amazon) are stored in the cloud and if they don't transfer across they can easily be downloaded. Before being downloaded they will appear on your new Kindle under the heading, 'Library'.
I am unsure but it would be safe to assume that the books need to be purchased through Amazon. In any case the Amazon library of books is so vast that I feel confident I could obtain almost any book I wanted.