Basically you go to the website (http://www.geocaching.com/) look for where the items are hidden in your neighbourhood and you go and search for it. Most people use handheld GPS units to find the treasures, because you are given coordinates to point you to exactly where the items are located, but me being a little poor these days, I am using 'Google Earth' and printing off maps for each location. Some are easily found and some are not.
The photos below are from Harry and I finding a cache called 'Civil Cults', with this one you had to work out a long division maths sum, which gave you the actual coordinates of where to find the item.
I say treasure hunt, but really most of these contain little junky toys, Harry found a packet of Domino's in this one, but you can be lucky and find special coins that are worth a few dollars or 'travel bugs' which are items that are meant to travel around the world - so when you find one, you take it and put it into another cache in the hope that everyone keeps it travelling. There are websites that follow their movements.
Most of my friends think I am a little crazy for doing this, but hey maybe this takes me back to my Girl Guide days, but I love it - think ill have to hint a little harder to get a GPS for Christmas.