What I suspect happened here is you had laid something heavy on top of your air so the logo disk in the lid embossed the defuser sheets. So what you see is the light from the backlight (really on the upper & lower edge) being distorted by the damage.
Sadly, this is not an easy repair. Most people have found they end up making it worse! I would live with it, or think about finding a used display assembly to replace yours.
Yes, this is the light source for the screen (Back Light).
No it won't get worse as ling as you don't put something heavy on the lid again. Frankly, you were lucky here! More often the screen gets damaged (black or color bars).
As for altering the brightness it may help to make it less noticeable. But that will only go so far.
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