One can also use this for things such as foods (cheese for example) or drinks (especially wine). To say it ages well means that it gets better with age.
Although, when talking about a person, it doesn't directly imply that they have improved their looks as they have got older. It simply means that as they look very good for their age.
Probably not. In such situations, it is conventional to reply with disbelief - something like "What? I can't believe you're 70! You look great!" Adding "for your age" or "you've aged well" would lessen the pleasant nature of the complement by emphasizing the woman's age rather than her appearance.