Cannons and Archer Towers), preferably with a Wall in between.
If possible, keep your Air Defenses behind your first lines of defense (e.g.
Air Defenses are there for when Archer Towers and Wizard Towers just won't cut it or are distracted by ground units such as Giants and Heroes. Make sure they are defended well, and they will help to keep the skies clear from rampaging Balloons, Dragons, Healers, Lava Hounds, and Minions.
The Air Defense is a popular first target for armies sporting ground troops, as they are one of only 2 defensive structures that cannot target them (the other being the Air Sweeper).
If not, other point defenses such as Archer Towers and Hidden Teslas or 2 Seeking Air Mines are recommended. Single-Target Inferno Towers are most effective if you have them.
Lava Hounds target this building first, so make sure you defend it well with other defenses which target air troops.
One common strategy for Town Hall 7 and above is to position them in a wide triangle (or diamond, once the fourth Air Defense is available around Town Hall 9). As the in-game description states, it's best to position them so that they cover as much area as possible.
The Air Defense has an excellent range and a very high damage per shot.