Manuscript was accepted for publication but recommended with "Major revision" Recently my invited manuscript submission was finally recommended by the Editors and reviewers for publication after one round of revision and changing the manuscript type. However, I am both concerned and confused that the Associate Editor appended revision comments and declared the MS requires "Major revisions". Any advice on how to deal with this?
I'm going to guess that, assuming this is a reputable publisher, that your "acceptance" was a bit tentative and that you need to satisfy the associate editor. You need to go over your manuscript with the comments in mind and make revisions that satisfy you and will hopefully satisfy her/him. Otherwise you might not get a happy result. 

On the other hand, if it isn't a reputable publisher, then they will probably publish anything you give them so long as you pay the fees. But it is still preferable to make the editors happy. 

I doubt that many would consider a letter indicating "acceptance" to be a contract and they can afford better lawyers than you can in any case.