You'll be prompted to provide your password. If the login is successful, you'll be given a command prompt, just like you would with telnet. The difference is that all the communication between your computer and the remote machine are encrypted.
Nothing is passed in plain text that can be easily spotted by a sniffer.
By default, ssh assumes that your local username and remote username are the same. Every time you visit that machine, ssh will check to see if it still has the same key. If you know that the remote server has not changed its key, then someone is doing something nasty and you can refuse the connection. Instant remote xterm. The -f switch requests ssh to go to background after authentication is done and forwardings have been established.