AVR Freaks

Alright. I read what you explained and I decided to get a closer look at the ATMega88 (note that I'm not using the ATMega328 like advertised in the main question) datasheet. I managed to redo the code without the magic numbers (partly) aswell as explain in comments what I'm expecting to happen (why am I setting this bit, or not setting that bit, etc.). At the moment, the code looks like this:

#include <avr/interrupt.h>
#include <stdio.h>
#include <avr/io.h>
#define LED 1

volatile unsigned char count = 2;                            // Counter
volatile unsigned char led ;                                // Verifies if LED is turned ON or OFF

void inic(void) {
    
    PORTD = 0b00000011;                                        // Defined PD0 / PD3 as outputs. PD0: Blinking LED ; PD3: LED (pwm) [OC2B].
    DDRD = 0b00000011;

    TCCR0A = (1<<WGM01);                                    // COM0Ax: Normal port operation ; COM0Bx: Normal port operation ; Bits 3&2: Reserved and read as zero ; CTC mode (T = [Prescaler/Clock] * (OCR0 + 1)
    TCCR0B = (1<<CS02)|(1<<CS00);                            // FOC0x: Read as zero ; Bits 5&4: Reserved and read as zero ; Prescaler = 1024 & Clock = 1Mhz
    TIMSK0 = (1<<OCIE0A);                                    // Timer/Counter0 Compare Match A interrupt enabled
    OCR0A = 243;                                            // 0,245 = [1024/1MHz] * (OCR0 + 1) <=> OCR0 = 243 (0,249 ms)

    TCCR2A = (1<<COM2B1) | (1<<WGM21) | (1<<WGM20);            // COM2Ax: Normal port operation ; COM2Bx: Clear OC2B on Compare Match & Set OC2B at Bottom ; Bits 3&2: Reserved and read as zero ; Fast PWM
    TCCR2B = (1<<CS21)|(1<<CS20);                            // FOC2x: Read as zero ; Bits 5&4; Reserved and read as zero ; Prescaler = 32 & Clock = 1Mhz
    OCR2B = 0;                                                

    ADMUX =    (1<<REFS0)|(1<<ADLAR)|(1<<MUX2)|(1<<MUX0);        // External capacitor on AREF pin (potentiometer) ; ADLAR adjusted to the left: Bit = 1 ; Bit 4 ; Reserved and read as zero ; PC5 (ADC5) defined as input
    ADCSRA = (1<<ADEN)|(1<<ADIE)|(1<<ADPS1)|(1<<ADPS2);     // ADEN enabled: Bit = 1 ; ADSC set when converting ; ADATE: Disabled auto triggering of the ADC ; ADIF: Set when conversion completes ; Prescaler = 8

    sei();                                                    // global int enable
}

ISR(ADC_vect) {                                                // ADC interruption
    
    OCR2B = ADCH;                                            // Transfers the value of the potentiometer to the led on PD3
    ADCSRA |= (1<<ADSC);                                    // Starts the conversion
}

ISR(TIMER0_COMPA_vect) {                                    // Led blink interruption
    
    count--;                                                // Counts 250ms
    led = (PORTD & LED);                                    // Blinking LED
    
    if (count==0 && led==0) {                                // Count = 2 by default. 250ms * 2 = 500ms. Half a second on, Half a second off. Comes here if led is turned off
        PORTD |= LED;                                        // LED ON
        count = 2;                                            // Reset counter
    }

    if (count==0 && led==1) {                                //Comes here if led is turned on
        PORTD &= ~LED;                                        // LED OFF
        count = 2;                                            // Resets counter
    }
}

void main(void) {
    inic();                                                    // Calls the inic function
    
    ADCSRA |= (1<<ADSC);                                    //Starts the ADC conversion

    while(1){                                                //infinite cycle
    }

}

I have some questions though:

1. I wrote OCR2B = 0; without knowing the formula (I took it from a work I made last year). I searched for a formula near the Fast PWM section but could only find one that calculates the PWM frequency (Clock/Prescaler*256). Why is OCR2B = 0?
2. In your reply you wrote: 
   

   PORTD |= LED1;

   and 

   PORTD &= ~LED1;

   Is LED1 a typo or is it supposed to be like that? The variable is called LED in the define function at the top of the program. I wrote LED only in my code, as you can see.

3. Is this right? 
   

       while(1){                                                //infinite cycle
       }

4. So far, am I any near of my objectives? (Blinking a LED - 500ms ON and 500ms OFF) (Changing a LED brightness via PWM) (Having a 1Hz wave on the output of my atmega).

EDIT1: This is the FAST PWM Mode section on the datasheet. There's this formula but I have no idea what it has to do with OCR2B. Also, I end up with ~120Hz at the end of this equation. What's this for / does it have any purpose for this project?