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Well, expecting free cookies?. Sorry you are not going to get it here. This article is about the internet cookies, that are being stored in your computer whenever you visit a website.Internet cookies provide capabilities that make the Web much easier to navigate. The designers of almost every major site use them because they provide a better user experience and make it much easier to gather accurate information about the site's visitors.

Basic Facts:

Cookies are not programs, and they cannot run like a program does. Therefore they cannot gather any information on their own. Nor can they collect any personal information about you from your machine. A cookie is a piece of text that a web server can store on a user's hard disk. Cookies allow a web site to store information on a user's machine and later retrieve it. The pieces of information are stored as name-value pairs.
For example, a web site might generate a unique ID number for each visitor and store the ID number on each user's machine using a cookie file.
If you use Microsoft's Internet Explorer to browse the web, you can see all of the cookies that are stored on your machine. The most common place for them to reside is in a directory called c:\windows\cookies. You can see in the directory that each of these files is a simple, normal text file. You can see which web site placed the file on your machine by looking at the file name (the information is also stored inside the file). You can open each file up by clicking on it.

For example, Say you have visited xyz.com, and the site has placed a cookie on your machine. The cookie file for xyz.com contains the following information:

UserID A9A3BECE0563982D www.xyz.com/

What xyz.com has done is stored in your machine a single name-value pair. The name of the pair is UserID, and the value is A9A3BECE0563982D. The first time you visited xyz.com, the site assigns a unique ID value and stores it your machine. [Note that there probably are several other values stored in the file after the three shown above. That is housekeeping information for the browser.] The vast majority of sites store just one piece of information -- a user ID -- on your machine. But there really is no limit -- a site can store as many name-value pairs as it likes.

A name-value pair is simply a named piece of data. It is not a program, and it cannot "do" anything. A web site can retrieve only the information that it has placed on your machine. It cannot retrieve information from other cookie files, nor any other information from your machine.

So what?

Now you will wonder what's the big deal about storing a number in your system, that too less than 100 bytes size. Now here comes the main part. The cookie that is stored in the your system is retrieved back by the same website xyz.com when you visit them next. The web site can store the data, and later it receives it back. A web site can only receive the data it has stored on your machine. It cannot look at any other cookie, nor can it look at anything else on your machine.
Data gets transmitted as follows.

You visit the xyz.com website using your internet browser which sends in the request for that site.
xyz.com website server now will search for any cookies that has been placed by its server before it gives the homepage file to your browser.
If it finds no cookie file, it will send no cookie data. If name-value pairs are recieved then the web server will use them. If not, it can assign a new cookie for you. It can also modify the existing cookie on your system.

There are other pieces of information that the server can send with the name-value pair. One of these is an expiration date. Another is a path (so that the site can associate different cookie values with different parts of the site). You have control over this process. You can set an option in your browser so that the browser informs you every time a site sends name-value pairs to you. You can then accept or deny the values.

What's the purpose?

Web sites use cookies in many different ways. Here are some of the most common examples:

Sites can accurately determine how many readers actually visit the site. It turns out that because of proxy servers, caching, concentrators and so on, the only way for a site to accurately count visitors is to set a cookie with a unique ID for each visitor. Using cookies, sites can:

Determine how many visitors arrive
Determine how many are new vs. repeat visitors
Determine how often a visitor has visited
The way the site does this is by using a database. The first time a visitor arrives, the site creates a new ID in the database and sends the ID as a cookie. The next time the user comes back, the site can increment a counter associated with that ID in the database and know how many times that visitor returns.

Sites can store user preferences so that the site can look different for each visitor (often referred to as customization). For example, if you visit msn.com, it offers you the ability to change content/layout/color. It also allows you to enter your zip code and get customized weather information. When you enter your zip code, the following name-value pair gets added to MSN's cookie file:
WEAT CC=CA%5SanDiego%2DDurham®ION= www.msn.com/
(if you are living in SanDiego, CA, then you will get something like above)

Ecommerce Sites can implement things like shopping carts and "quick checkout" options. The cookie contains an ID and lets the site keep track of you as you add different things to your cart. Each item you add to your shopping cart is stored in the site's database along with your ID value. When you check out, the site knows what is in your cart by retrieving all of your selections from the database. It would be impossible to implement a convenient shopping mechanism without cookies or something like it.

In all of these examples, note that what the database is able to store is things you have selected from the site, pages you have viewed from the site, information you give to the site in online forms, etc. All of the information is stored in the site's database, and a cookie containing your unique ID is all that is stored on your computer in most cases.

Problems with Cookies

Cookies are not a perfect state mechanism, but they certainly make a lot of things possible that would be impossible otherwise. Here are several of the things that make cookies imperfect.

People often share machines -- Any machine that is used in a public area, and many machines used in an office environment or at home, are shared by multiple people. Let's say that you use a public machine (in a library, for example) to purchase something from an on-line store. The store will leave a cookie on the machine, and someone could later try to purchase something from the store using your account. Stores usually post large warnings about this problem, and that is why. Even so, mistakes can happen.On something like a Windows NT machine or a UNIX machine that uses accounts properly, this is not a problem. The accounts separate all of the users' cookies. Accounts are much more relaxed in other operating systems, and it is a problem.
Cookies get erased -- If you have a problem with your browser and call tech support, probably the first thing that tech support will ask you to do is to erase all of the temporary Internet files on your machine. When you do that you lose all of your cookie files. Now when you visit a site again, that site will think you are a new user and assign you a new cookie. This tends to skew the site's record of new versus return visitors, and it also can make it hard for you to recover previously stored preferences. This is why sites ask you to register in some cases -- if you register with a user name and a password, you can re-login even if you lose your cookie file and restore your preferences. If preference values are stored directly on the machine (as in the MSN weather example above), then recovery is impossible. That is why many sites now store all user information in a central database and store only an ID value on the user's machine.

Why the Fury around Cookies?

If you have read the article to this point, you may be wondering why there has been such an uproar in the media about cookies and Internet privacy. You have seen in this article that cookies are benign text files, and you have also seen that they provide lots of useful capabilities on the web.

There are two things that have caused the strong reaction around cookies:

The first is something that has plagued consumers for decades but is now getting out of hand. Let's say that you purchase something from a traditional mail order catalog. The catalog company has your name, address and phone number from your order, and it also knows what items you have purchased. It can sell your information to others who might want to sell similar products to you. That is the fuel that makes telemarketing and junk mail possible.

On a web site, the site can track not only your purchases, but also the pages that you read, the ads that you click on, etc. If you then purchase something and enter your name and address, the site potentially knows much more about you than a traditional mail order company does. This makes targeting much more precise, and that makes a lot of people uncomfortable. Different sites have different policies.

The second is new. There are certain infrastructure providers that can actually create cookies that are visible on multiple sites. DoubleClick is the most famous example of this. Many companies use DoubleClick to serve ad banners on their sites. DoubleClick can place small (1x1 pixels) GIF files on the site that allow DoubleClick to load cookies on your machine. DoubleClick can then track your movements across multiple sites. It can potentially see the search strings that you type into search engines (due more to the way some search engines implement their systems, not because anything sinister is intended). Because it can gather so much information about you from multiple sites, DoubleClick can form very rich profiles. These are still anonymous, but they are rich.

DoubleClick and companies like it are in a unique position to do this sort of thing, because they serve ads on so many sites. Cross-site profiling is not a capability available to individual sites, because cookies are site specific.

Links:

Cookie - Webopedia Definition and Links
WhatIs.com: Cookie
Cookie FAQ from Cookie Central
Netscape: Cookies - what they are and how they work
Microsoft: Cookies: What They Are, Why You Are In Charge
Microsoft: Location of Cookies File in Internet Explorer
Microsoft: How to Set and Customize Cookies Settings in Internet Explorer 5