There's all sorts of extra bells and whistles, but the basic idea is that you select the phone(s) you want in your Google Voice system by entering their real numbers. You then put in a zip code or an area code, and Google will give you some options for Google Voice phone numbers. You can also try your luck at selecting your own, but it isn't often that one you try will match one in their database of available numbers.

Once you have your phone number, you can give that out as your number. Anyone calling that number will get the phone(s) you assigned it to. You can also dial out using the Google Voice interface. You put in the number you want to call, hit Call, and your phone rings. You pick it up, and you hear the phone you're calling ring. If the person you're calling has caller ID, he'll see your Google phone number, not the real number you're calling from.

Everyone I know who has it uses it to keep their cell phone numbers private. You also get voicemail.

All this is separate from your real number. Anyone calling your real number will get your "real" voicemail, and anyone you call using your "real" phone will see your real number on caller ID.