Multi-table tournaments (or MTTs) have the same set of basic rules as their single table equivalences, but because of the larger starting fields take longer to finish. As with STTs, you typically pay a buy-in plus a fee to enter, the former adding to the prize pool and the latter to the organizer.
A tournament overview. Note the information on prizes, breaks, stack sizes, number of entrants left, etc.
The prize structure varies, of course, but as a general rule of thumb, somewhere between 10 and 20 percent end up in the money in a larger tournament. Add together the facts that they're relatively time consuming, that one mistake can knock you out, and that only one out of 10 people entering will make any money off of it, and you understand how not many people play MTTs as their primary source of income. Although you do win a huge amount of money when you hit first place, these first places can be few and far between.
This should not discourage you though - tournaments can be both fun and profitable. In fact, because of the added difficulty of balancing stack sizes and picking up reads over the course of a larger tournament, the skilled players have an even greater edge than they do in ring games and even in STTs. That edge, unfortunately, does not translate into immediate profit, and so even the best players still need to be prepared to enter quite a few tournaments until they can manage to get their payday.
As the ruleset for tournaments has been explained already, it just remains to talk about the two things that are somewhat unique to MTTs: breaks and table merges; and breaks are actually self explanatory - every hour (usually, this may vary between sites and tournaments) the players get 5 or so minutes to go the bathroom, fetch a drink, etc., before play resumes again.
Table merges, however, are a bit less than obvious, if you have not seen them before. Basically, table merges occur (automatically online) to keep all tables as full as possible, and to make sure that no one table has a lot fewer players than another. For instance, let's say that there are four tables left, and there are eight players on each of them, for a total of 32 players. Now two players get knocked out, leaving only 30. At this point, the site will automatically re-arrange the seatings for three tables, filling each of them with 10 players - presuming that the site has 10 players per table.
Likewise, if there are four tables left with 10 players on each, and two players get knocked out on one of them, making the distribution 10/10/10/8, the site may automatically (and, one presumes, randomly) re-assign one of the players from the other three tables to sit at the shorthanded one, making the distribution 10/10/9/9 instead.
Most players I know treat large MTTs as a complement to everyday play; it's something that's done occasionally for the fun of it, and if you're lucky you get a big payday, and if you get knocked out early, you've only lost a relatively small buy-in. Another reason is that most people I know play recreationally and do not have the time to spend 4-5 hours playing one tournament. Of course, the average time used on a tournament is much less than if you make it to the final table, but the point still stands: If you enter the tournament, you have to be prepared to sit there for the full duration. It would definitely be unfortunate if you have to go pick up the kids just after having gotten to the final table, wouldn't it?