Discussions of the morality or implications of the rating system aside, the fact is that it's here to stay. Bear in mind, however, that the ESRB's rating system is entirely voluntary. While support for it is nearly ubiquitous (a full list of participating companies is available at http://www.esrb.org/esrb_part_comp.asp), no company faces censure for ignoring it entirely. That said, always handy is a quick-reference guide to interpreting the ESRB's ratings.
The ESRB's reach extends only to North America. There is a similar organization in the UK, however, known as ELSPA.
Each rating has a simple black-and-white logo, displayed on the cover of any rated game, as well as in any promotional material. The logos are actually fairly attractive, especially compared to the Parental Advisory: Explicit Lyrics label or the various movie ratings labels.
Of special note is the fact that the ESRB strongly encourages adding the name of the rating to the name attribute of the <img> tag when the logo is used in promotional web pages, so that the actual name of the rating will pop up as a "tool tip".
These ratings are:
EC - Early Childhood - Rarely used, this is completely innocent content, appropriate for ages three and under. Generally, this is limited to edutainment titles aimed at very young children, as even cartoon violence or comic mischief will exclude a game from this rating.
E - Everyone - These are appropriate for all players ages six and up. Minor cartoon violence or comic mischief is allowed, but any graphic violence, blood, profanity, or adult themes will disqualify a game for this rating.
K-A - Kids to Adults - Retired on January 1, 1998, this rating was replaced by E, and had nearly the same description. (Different wording, same meaning.)
T - Teen - Aimed at players ages 13 and up, the difference between this category and M is largely a matter of degree. A T game may have graphic violence, sexually suggestive themes (althought not nudity), and blood, although more severe examples will be rated M.
M - Mature - M games, aimed at players ages 17 and up, are to date the only rating enforced by retailers. (And even then, not universally.) Nudity will always fit a game into this rating or higher, and intense graphic violence or highly suggestive themes will earn a game this rating.
AO - Adults Only - Pornography. Only graphic depictions of sexual acts can earn a game this rating, as no game to date has even come close to recieving this rating for violence (and, likely, no game will.) The refinement of this standard comes from the controversy over BMX XXX, where the ESRB stated that nudity will only earn a game an M rating. As of this noding, no game has recieved an AO rating, largely due to the fact that many major retailers have stated that they would not carry any AO games.
RP - Rating Pending - Unlike the others, you'll never see this rating on a game's packaging, generally only on demos or advertising. This simply states that the final version of the game has yet to be delivered to the ESRB for rating.
The ESRB also submits the reasons that a game recieves a rating, in the form of standardized descriptors. Generally, this information can be found on the back of the game's packaging, in a small black and white box.
Unlike the above descriptions of the ratings, this information about the descriptors is taken verbatim from the ESRB's site at esrb.org, as no interpretation is needed and these are the canonical definitions.
Animated Blood - Cartoon or pixelated depictions of blood.
Blood - Depictions of blood.
Blood and Gore - Depictions of blood or the mutilation of body parts.
Comic Mischief - Scenes depicting slapstick or gross vulgar humor.
Edutainment - Content of product provides user with specific skills development or reinforcement learning within an entertainment setting. Skill development is an integral part of product.
Gambling - Betting like behavior.
Informational - Overall content of product contains data, facts, resource information, reference materials or instructional text.
Mature Sexual Themes - Provocative material, possibly including partial nudity.
Mild Language - Mild references to profanity, sexuality, violence, alcohol, or drug use.
Mild Lyrics - Mild references to profanity, sexuality, violence, alcohol, or drug use.
Mild Violence - Mild scenes depicting characters in unsafe and/or violent situations.
Nudity - Graphic or prolonged depictions of nudity.
Partial Nudity - Brief and mild depictions of nudity.
Some Adult Assistance May Be Needed - Early Childhood Descriptor only.
Strong Language - Profanity and explicit references to sexuality, violence, alcohol, or drug use.
Strong Lyrics - Profanity and explicit references to sex, violence, alcohol, or drug use in music.
Strong Sexual Content - Graphic depiction of sexual behavior, possibly including nudity.
Suggestive Themes - Mild provocative references or materials.
Use of Drugs - Use of drugs in a manner that condones or glorifies their use.
Use of Tobacco and/or Use of Alcohol - Use of tobacco and/or alcohol in a manner that condones or glorifies their use.
Violence - Scenes involving aggressive conflict.
The ESRB also has some discontinued descriptors, although some games may still use them, owing to older ratings.
Gaming - Betting-like behavior.
Mild Animated Violence - Mild cartoon or pixilated scenes depicting animated characters in unsafe and/or violent situations.
Mild Realistic Violence - Mild photographic-like detailed depictions of characters in unsafe and/or violent situations.
Animated Violence - Cartoon or pixilated scenes depicting animated characters in unsafe and/or violent situations.
Realistic Violence - Photographic-like detailed depictions of characters in unsafe and/or violent situations.
Animated Blood and Gore - Cartoon or pixilated images of blood or the mutilation of body parts.
Realistic Blood and Gore - Photographic-like detailed depictions of blood or the mutilation of body parts.
Realistic Blood - Photographic-like detailed depictions of blood.
Reading Skills, Fine Motor Skills, Higher-Level Thinking Skills - These phrases are found only on products rated Early Childhood and indicate whether children's reading, computer, or other skills are used in these titles.
See also: Interactive Digital Software Association v. St. Louis County, Missouri, video games are not speech, movie ratings, Parental Advisory: Explicit Lyrics, Burstyn v. Wilson.
Sources: esrb.org, gamespot.com, gamers.com