How do Torrents work?

I've been hearing a lot about torrents and how easy it is to get and share files this way. I decided to give it a shot and found it pretty easy. What I also found is that the system is initially hard to understand, but really a pretty simple context. I read the wikipedia entry and then talked with a few friends who were a little more conversant in the systems (and helped me figure out what to download to give it a shot.

Here's how it works: remember the heydey of napster when you could share any song in the world peer-to-peer? It's the same idea, but with a twist. When that was happening, we were actually sharing entire files with other users. I remember how annoying it would be when people would cut you off or they would go offline before the song finished downloading.

This worked okay when the files were song-sized. Now they're so many times that size because they're video files. Epsodes of TV or even whole movies. The great insight is that you split these big files up into a bunch of tiny chunks and create an index file. The index file is like a corn-cob that organizes the little kernels of the big file and indicates how they fit together.

Once a file is broken into the little chunks, you can download pieces of a movie from lots of different uses at the same time. The group is called a swarm - cool name, eh? The people you're downloading the kernels from are seeders. The people downloading the kernels to assemble a full ear of corn are called leechers.

One of the cool things about this system is that you can start to seed the kernels that you have complete before you have the whole ear of corn finished. I guess it's possible that you could be in a swarm with a few other leechers and complete each others' files even if nobody has a complete file to begin with.

Somehow, I think this also limits your liability for sharing proprietary files. Not sure about that. Does anybody know?