A mezuzah (מְזוּזָה , literally “door jamb,” pluralמְזוּזוֹת mezuzot) consists of a piece of parchment enclosed in a case. The parchment (the “klaf”) holds verses from Devarim (Deuteronomy) 6:4-9 and 11:13-21. Included in those verses is the Shema, which tells us to affix “these words” - the instructions to love and teach and talk, etc., - in various places, including “upon the doorposts of your house and upon your gates.” Thus we are affixing the words which direct us to affix, which once affixed we can no longer actually read.
The parchment is prepared by a sofer (also called a sofer stam - ST"M,סת"ם , being basically an acronym of the terms “sofer Torah, tefillin, mezuzot”), a scribe who has been trained to carve a quill and write with the proper calligraphy. The quill might be made of a reed, as in ancient times, or of a feather, and the ink must be indelible. The person and the equipment and the method must all be kosher. The mezuzah case can be made of almost anything, as long as it allows access to the klaf so that it may be checked for kashrut (kosherness) periodically. Many recommend checking twice every seven years. In some homes, you will find a mezuzah on every door jamb (except bathrooms, closets, and the like). In many homes the mezuzah is only on the front and maybe the back door.
A mezuzah is affixed to the right side of the door as one enters the room. It is placed in the lower part of the top third of the doorway, at a slant with the lower part toward you as you head into the room. It should be attached at the top and the bottom to be absolutely certain that a holy object will not hit the floor.
The blessing is said while holding the mezuzah, just before affixing it to the doorpost:
בָּרוּךְ אַתָּה ה‘, אֱ-לֹהֵֽינוּ מֶלֶךְ הָעוֹלָם, אֲשֶׁר קִדְּשָׁנוּ בְּמִצְוֹתָיו וְצִוָּנוּ לִקְבֹּעַ מְזוּזָה:
Sometimes on the outside of the container, and customarily on the outside roll of the scroll is written “שדי,” “Shaddai,” “Almighty,” which some say is an acronym for Shomer Daltot Yisrael, Guardian of Israel’s Doors (also seen above the Ark in our Sanctuary). Many mezuzah cases hold just the first letter, shin.
It is probably worth another of these boxes to discuss the mysticism and superstition around mezuzot.