AZH prefix would correspond to 1988.
Your understanding of the "dash" system of design/engineering changes is basically correct. The "no dash" 686 was introduced in 1980. Revisions, their intro dates, and an [abbreviated] description of the changes:
-1 (1986) radius stud package, floating hand
-2 (1987) change hammer nose, bushing
-3 (1988) new yoke retention system
-4 (1993) change rear sight, drill and tap for scope, change extractor
-5 (1997) cylinder stop integral with frame, MIM hammer and trigger, internal changes
-6 (2001) introduce the dreaded ILS
-7 (2002) Performance Center model
The 686 is in current production, and I suspect they're selling tons of them. I have two, along with a pair of 586s, and they're great guns in every way.
With regard to the -2 change: that was in response to reports of cylinder lockup with some loads apparently caused by primer cup flowback into the firing pin bushing area. S&W issued a recall for the "no dash" and -1 models of the 586 and 686 so the firing pin and bushing could be changed to the new (-2) design. Guns that have been modified will be stamped with an "M" in the model number area. If your "no dash" doesn't have that, then it has the old design and I believe S&W will still make the change at no cost to you. If you're using it as a range gun (which is what I do with mine, a couple of which haven't been modified) then I probably wouldn't bother. If it's an SD gun, then you probably should call S&W and have it taken care of.