Webcams, like most things, range from simple to complex. If you understand the essence of a simple Webcam setup, increasing the complexity is only a matter of adding functionality through software, custom code and/or equipment connections.
A simple Webcam setup consists of a digital camera attached to your computer, typically through the USB port. The camera part of the Webcam setup is just a digital camera -- there's really nothing special going on there. The "Webcam" nature of the camera comes with the software. Webcam software "grabs a frame" from the digital camera at a preset interval (for example, the software might grab a still image from the camera once every 30 seconds) and transfers it to another location for viewing. If you're interested in using your Webcam for streaming video, you'll want a Webcam system with a high frame rate. Frame rate indicates the number of pictures the software can grab and transfer in one second. For streaming video, you need a minimum rate of at least 15 frames per second (fps), and 30 fps is ideal. To achieve high frame rates, you need a high-speed Internet connection.
Once it captures a frame, the software broadcasts the image over your Internet connection. There are several broadcast methods. Using the most common method, the software turns that image into a JPEG file and uploads it to a Web server using File Transfer Protocol (FTP). You can easily place a JPEG image on any Web page (for information on creating Web pages and adding JPEG images, see How Web Pages Work).
If you don't have your own Web server, lots of companies offer you a free place to upload your images, saving you the trouble of having to set up and maintain a Web server or a hosted Web site.
This is the simplest possible Webcam. Let's see what you need to make it happen.