Hi
I'm not quite clear whether you're interested in affiliate marketing from the standpoint of being an affiliate or running an affiliate program.
Here's how it works from the standpoint of being someone's affiliate...
Ok, so let's say my hobby is 80s music and collectables and I want to build a website about it.
However, I want to be able to generate some income by recommending other's products.
So let's say I build a page of my top ten 80s icons...
At the end of that page I'd provide a link to another site recommending their products, it may be CD's, posters, concert tickets, yo get the idea.
Now, if I'm in their affiliate program and a site visitor clicks over to their site and purchases £100 worth of CD's or whatever, the company pays me a commission for that sale.
Another example, I'm an affiliate for sitesel.com
http://www.sitesell.com/bigmix.html
See the bigmix.html part of the address? That tells Sitesell that whoever has visited their site and hopefully bought something, did so because I provided the link. Therefore they know who to reward for that sale.
The gbest way of finding out how it works is by joining a good affiliate program.
The sitesell one is damn good, simple because they show you exactly how to play the affiliate game properly. they have tons of free stuff to download that can help you build up income etc etc etc, I won't bore you with the details, just take a look at
http://affiliates.sitesell.com/bigmix.html
Joining would also give you access to one of the best forums I've come across on the internet, and most of you will know that there are view few of those
Hope that's helped a bit, erm...or maybe not hahaha
Darren