The fantasy points are tied to individual stats, that are reported in close to real-time from the NFL (or stats provider). The league begins with a draft, much like real football. Random positions are assigned, and each player takes turns picking from the full roster of available players until each player has filled up his team, with a couple of spots left over for backups.

Like on a real team, your fantasy team consists of a quarterback, a couple of wide receivers, a couple of running backs, a tight end, a defense, etc. Different leagues have different roster spots -- some have tight end as a position, some don't; some allow you to pick individual defenders to comprise your defensive team, some just let you pick defensive units (e.g., "Kansas City Chiefs Defense") as a whole. Generally though, they're pretty similar.

The way that it works, in a nutshell, is that you have fantasy points that attach to real-life events. E.g., a touchdown is worth x points for the player that scores it. As such, because you're playing individual players, instead of just playing a team, you can mix and match to get great results.

A great example is Adrian Peterson, who is the best player on a pretty middling team. Adrian Peterson is the running back, which basically means that his primary job is to be handed the ball and run. His quarterback is not very good (comparatively, all the players in the NFL are good), so they over-rely on the running game to advance the ball. This means that, in real life, the team is very unlikely to win a game, but in fantasy-land, Adrian Peterson is likely to get a lot of points... also, he's an exceptionally good running back, and was likely picked #1 in pretty much every league this year.

The stats get a lot more complicated than that though. Quarterbacks get points for throwing the ball, but at the same time, receivers get points for catching the balls thrown. These points are scored differently. The result, basically, is that if you have a team with a mediocre quarterback, but that also has only one good wide receiver, that wide receiver might get more fantasy points than a receiver on a much better team, with a much better quarterback, because in the former, the one good receiver is likely to get a disproportionate amount of receptions (because there are fewer targets for the Quarterback), while the better team may have more recipients for the quarterback to throw to.

It is a lot more complicated than just picking 'good' players, because too many scenarios arise where good players don't play well in a given game, or act as decoys to allow lesser players to do more of the work. A great example here is Calvin Johnson, who is one of the best receivers in the game. Because he is so good, he often has games where he scores very little in fantasy points, because his role in those games is to draw double-teams from defenders. Those defender, now paying disproportionate attention to Calvin Johnson, leaves holes in the defense for lesser receivers. That's just an example though, because in practice, Calvin Johnson usually draws double-teams, and is still usually able to make lots of plays because he's insanely talented.

Each week, you select the players on your roster you want to start, taking into consideration things like whether your player is playing that week (football has rotating bye weeks, players may be out on injury), how each player is likely to do (e.g., a quarterback playing a very tough defense may be expected to play more poorly than a worse quarterback playing against a looser defense), etc.

Your roster is pitted against another player in your league, and whomever's roster combines for the most fantasy points wins the week, and gets a new opponent next week. Your total team's points are compared against your opponent's, and whoever has more 'wins' the week. That win gets tacked onto your record -- e.g., if you win the first week, you're 1 and 0. Lose next week, you're 1 and 1. Competition happens tournament style.

As a fan, fantasy football makes things... complicated. My fantasy quarterback is Aaron Rodgers, and the team I root for in real life is the Baltimore Ravens. It leaves for very conflicted feelings when Aaron Rodgers is playing an amazing game against the Baltimore Ravens, as happened two weeks ago.

Or, your opponent may have the quarterback that throws to your wide receiver, which means you end up rooting for ridiculous scenarios like "Adam Smith needs to throw a very short pass to Dwayne Bowe, who then runs for a very long touchdown" to minimize the QB points and maximize the WR points.

It is fun though, and it appeals to me both as a football fan and a geek, and I'm honestly surprised that more geeks don't play. Leagues can be very competitive, and people can spend as much time scouting stats and players week to week as top tier WOW players can spend prepping for raids... okay, not that bad.

Offtopic, there's a reference that I can't remember the attribution for, but seems appropriate for this thread.

"Fantasy Football is a glorified D&D for the jocks who used to beat us nerds up for playing D&D." -- is not too far off the mark.