That app is GoodReader ($2). You can do most of the markup you would in Adobe Reader, such as notes, highlights, and even free-form shapes (for
example, to circle an item). Once you get the hang of using your finger like a mouse for such actions, it's an easy-to-handle
app.
GoodReader is not just a PDF markup app. It can also view Office files, text files, and pictures, as well as play audio files.
In addition, it comes with a Wi-Fi file-sharing capability to transfer documents to your computer.