Aspects and Fate Points
Where your race tells us what you are, and your class tells us what you can do, it's your aspects that tell us who you are. Aspects should not be overly long; a three-to-five word phrase, usually. It's also great if they're clever turns of phrase, too - but it should also be clear what they mean. Every character has five aspects:
High Concept: This is a basic overall description of you. It should probably contain your class and race, nationality, or other important affiliation, as well as an adjective or genitive or two. It can be a bit longer and less striking than other aspects, to fit all that info in. Examples: Forlorn Kuzdemban Wizard; Small-town Heartbreaker of a Cad; Impetuous Hadrastian Psion
Trouble: This is a persistent thing that, as the name suggests, comes to make trouble for you - and thus the party - usually at inconvenient times. It can be external or internal, either is fine. Examples: Former Assassin of Banando; Always Gotta Go; "I need my teddy!"
Drive: This is what motivates you. What keeps you going. What you want. It could be some kind of object or item, but it could also be a concept, ideal, or even a person. If you can combine multiple of those, even better. Examples: The Honour of the Lion Order; All-Consuming Greed; Mom's Old Sword
Personality: This is a kind of miscellaneous grab bag of an aspect. Some quirk of your personality that, while it doesn't necessarily drive you to adventure or cause you trouble all the time, nevertheless affects you. Examples: "Awww, kitty!"; Cheerfully Drunken Lout; Search Every Corner!
Camaraderie: This is something to do with your connection to the party. It could be the party as a whole, or one specific other member. Examples: "Gazu'll get me out of this!"; Keeping This Parade on the Street; Always by My Brother
Aspects are used to do two things: invoke and compel. When you invoke an aspect, that facet of your personality is helping you out, giving you an edge in the situation. When an aspect is compelled, whether by you or the GM, it is hindering you - and the party - in some fashion. This is where Fate Points come in - to invoke an aspect, not only does the situation need to be appropriate, but you must spend a Fate Point. For this, you can then reroll a d20 roll you just made or add a +4 fate bonus to it. You may invoke multiple aspects, spending multiple Fate Points, on one roll. Fate bonuses stack with eachother, so if you invoked two aspects for a +4 fate bonus each, it would total a +8 fate bonus. When one of your aspects is compelled, you are forced to act in some way - as dictated by your personality - that hinders you and the party. For this, you recieve a Fate Point that you can spend on an invoke later. However, you may also refuse the compel at the cost of a Fate Point.
Therefore, good aspects should be readily used for both invoking and compelling - that is, they should be simultaneously positive and negative traits - to keep the Fate Points flowing! An example of this would be that the aforementioned aspect "All-Consuming Greed" would be very helpful when you're fighting a dragon for its horde, or trying to steal something expensive, or bargaining for a low price on items. It would hinder you, however, when you get caught stealing some trinket you couldn't resist, or when an important NPC thinks lesser of you for it - and the whole party, by association - or when you refuse to let other party members use your cure potions, because they're YOURS, damnit! Good aspects should readily present such scenarios. Try to think of two or three situations each where you would invoke and compel an aspect, as I have done here.
Another important concept here is refresh. Every PC has a refresh of 4, which means they start each day with a minimum of 4 Fate Points. If they ended the last day with fewer than 4, their Fate Point count is raised to 4. If they ended the last day with more than 4, however, they do not lose Fate Points.