Resource: http://www.japanrailpass.net/eng/en001.html

What is this pass for?
It's more of a pass for people who wish to see as much of Japan in a short time. Which translates to shinkansen rides.
The Shinkansen is the fastest long distance transport in Japan, thus the costs are somewhat related to the number of Shinkansen rides.

It's benefit is that when you take valid lines you don't have to bother with buying tickets.
Another benefit would be that you get to reserve seats without paying an extra surcharge.

It's valid for:

1. All JR company's Train lines and shinkansen lines throughout whole of Japan. EXCEPT Tokaido Line Shinkansen Nozomi train.
   
   • Do note as well it only partially covers night trains
   
   
   • For some limited express lines you may need to pay a surcharge topup


2. JR company's Local bus lines


3. The following highway bus routes
   
   • Sapporo, Hokkaido <-> Otaru, Hokkaido
   
   
   • Morioka, Tohoku <-> Hirosaki, Tohoku
   
   
   • Tokyo, Kanto <-> Nagoya, Chubu
   
   
   • Tokyo, Kanto <-> Kyoto, Kansai
   
   
   • Tokyo, Kanto <-> Osaka, Kansai
   
   
   • Tokyo, Kanto <-> Tsukuba Center in Ibaraki, Kanto
   
   
   • Nagoya, Chubu <-> Kyoto, Kansai
   
   
   • Nagoya, Chubu <-> Osaka, Kansai
   
   
   • Osaka, Kansai <-> Tsuyama, Chugoku
   
   
   • Osaka, Kansai <-> Kasai Flower Center in Kasai, Hyogo


4. JR Miyajima Ferry

How much?
There is Ordinary and Green car passes. As i doubt anyone would really buy the Green car passes, I'll just have the Ordinary passes prices

7 day = 37800yen (Worth slightly less than 3 long shinkansen rides)
14days = 61200yen (Worth slightly more than 4 long shinkansen rides)
21 days = 79600yen (Worth slightly more than 6 long shinkansen rides)

How to buy?
You can only buy it via authorised agents in your own country. You cannot buy inside Japan. Plus only foreign passport holders can use this.
Here's a list of Authorised agents http://www.japanrailpass.net/eng/en005.html
They will give you an Exchange order where you change for the JR pass in Japan.

Where to change for a JR pass?
http://www.japanrailpass.net/eng/en009.html

Who should buy?
Definately not for budget travellers.
Basically if you forsee yourself taking enough Shinkansen rides to justify the cost, it's a convenient way to pay for your rides.
As I'm a fan of travelling cheap, Highway buses are still a good and very cheap way to travel long-distance in Japan.

If you are considering a pass, here's my tip...
Calculate the Actual cost of your total train rides in Japan and note which trains you are taking.
If your JR lines and Shinkansen line cost justify the cost of the pass.. by all means.

A reserved seat Tokaido Shinkansen Hikari train to Osaka from Tokyo is 13800yen, a 2 way ride is 27600yen.
It's still 10200yen more than the 7-day JR pass. So unless you are ABLE to spent at least 10201yen on other JR transports... please don't bother.

If you are just travelling within Tokyo or any single City in close quarters to the airport (and not anywhere else), you definately do not need a JR pass.