How Does Host-based Card Emulation Deal With Aid (application Id)?

I am gonna write a Payment Application based on Host-Based Card Emulation(HCE) of Android 4.4 (Kitkat) but I don't understand a process between AID (Application ID) and HCE service

Solution 1:

or It is used for Our written HCE service to recognize and then do whatever that define in our written HCE Service?

This is the case. You register your AID in the manifest file. If a reader selects your AID the NfcService then knows which HCE-service to start and to dispatch APDU transfers to.

All further communication will then get routed to your HCE Service until the reader selects a different AID or the reader stops providing the RF field.