I will not address the underlying technical aspects of UAC. For that see Mark Russinovich's blog. It does dive rather deep. Instead I'm going to address mechanics and considerations.
For most users, UAC can be described simply. It is a tool that informs you when something unusual is about to happen to your system. You can choose whether or not to allow the action to occur in an elevated privilege environment. This is an attempt to provide an opportunity for the user to exercise informed consent. This is just one instance of an effort to provide greater security and system stability. That is partially because all Vista users run with reduced privileges by default. In comparison, with XP some things such as, viruses, Trojans and other forms of malware, can silently install themselves. Note that UAC doesn't prevent nasty things from happening, but it should let you know that something potentially nasty is about to happen. You can choose to allow or disallow the action at your discretion.
But UAC is a bit more than that. It is coupled rather tightly with implementing application compatibility. Click here for more information, but basically disabling or bypassing UAC breaks some of Vista's application compatibility features.
So for those that don't have Vista yet, what does UAC look like in action? When you launch an application that Vista knows requires elevated access rights you see the following:
If you click on the down arrow in the lower left to see details you'll more information. In this instance I'm launching device manager.
If you launch an application that Vista does not know you get a slightly different looking prompt. In this instance, I'm installing Acrobat Reader:
So what are some of the tricks and tips with UAC?
If you have a program that is having problems running with UAC enabled, you can run the program compatibility wizard to force an elevation prompt every time the application is launched, do a right click and Run as administrator or you can use one of two methods to temporarily bypass UAC.
Word of caution. Do not attempt to install anti-virus/anti-spyware via compatibility mode or forced privilege elevation in order to get the install to succeed. Forcing these to install in an environment they don't recognize is very risky.