played with preferably large numbers
. One person
is the moderator
or game master
or whatever you want to call him/her
. Three people are werewolfs. One person is a seer
. The rest are villagers
The game proceeds in cycles, referred to as days. In the 'night' phase of the cycle, everyone closes their eyes. The moderator says "seer, pick someone to scry." The seer opens his/her eyes points to someone and the moderator nods if the target is a werewolf, and shakes his/her head if the target is not. Then the seer closes his/her eyes and the moderator says "werewolves, pick someone to kill." The werewolves all open their eyes and decide, by silent pointing and gesturing, on a single person to kill. Then the werewolves close their eyes and the moderator says "wake up." Everyone wakes up. The moderator announces the person that the werewolves have killed, and that person is out of the game.
In the 'day' phase of the cycle, the villagers decide on whom to lynch for being a werewolf. At any point a villager may say "I call a vote on so-and-so." Everyone who wants this person lynched raises their hands. As soon as a majority of people raise their hands, that person is dead and the game proceeds to the next cycle. If a majority is not reached, then the vote fails and the villagers have to continue deciding who to kill.
The game is won by the villagers when all the werewolves are dead. The game is won by the werewolves when they equal the villagers in number.
Who is a werewolf, and who is a seer, is of course secretly and randomly determined at the start of the game. Villagers may not claim to be the seer, but both the seer and the werewolves may.
The rules are fairly simple but game play ends up being very complicated. The seer will often know if a particular person is a werewolf or not, and could make this known during arguments about whom to lynch. But if the seer makes his/her identity known, then the werewolves will kill him that night, and the villagers will have no more seer. The werewolves want to lynch villagers, but don't want to appear too bloodthirsty or everyone will think they are werewolves and lynch them. The villagers just want to not be lynched, but they have no way of proving they aren't werewolves.
Note that when someone is killed, no information about the type of person killed (werewolf, seer, or villager) is provided.
The game can be incredibly cool or painfully lame. The first time I played it, people just wanted to lynch others and had no real care about winning or losing. The second time, people were very careful and thoughtful about who to lynch, and the game was much more complicated and interesting. The fascination of the game comes from trying to make decisions in the face of imperfect information combined with misinformation.
FWIW, I have never seen the villagers win a game. The closest I've seen is the villagers get down to one werewolf and two villagers, and then lynch the wrong villager. Me, as it turned out.
I've also heard of this game being called Mafia and Witch, with different names for the kinds of participants.