Mandarin is the most important Chinese dialect. It is based on the dialect spoken in Beijing and has been the official language of China for many centuries. This is also the reason why Westerners named it "Mandarin", since they first got to know it as the language used by the imperial magistrates, the mandarins.
Unfortunately, the predominant role of Mandarin has led to the wrong identification of Mandarin with "the Chinese language" (for details, see the entry on Chinese language). So one often sees figures giving the number of speakers of Mandarin as 1.3 billion, tacitly assuming that all people in the People's Republic of China and on Taiwan speak Mandarin. This is only partly correct: Both the PRC and Taiwan use Mandarin as the official language and promote its nationwide use, but especially in the southern provinces of mainland China, Mandarin is still far from supplanting the local dialects in daily use, and since these differ quite a lot from Mandarin, many people, especially the common people, don't speak it very well.
One other common misconception is that Mandarin is the same as "Beijing dialect". Mandarin is based on Beijing dialect in that the "standard" pronounciation and grammar are supposed to be the same as Beijing dialect. However, "standard" Mandarin is a rather elusive concept, and Mandarin spoken outside of Beijing is fairly different from that spoken within: residents of Beijing tend to make very heavy use of retroflex suffices, and the vocabulary of "standard Mandarin" and that of Beijing can be quite different.
From an official point of view, there are two "Mandarins", since the Beijing government calls "their" Mandarin "Putonghua" ("Common Language"), whereas the Taiwanese government refers to their official language as "Kuoyü" ("Country Language" - on the transcriptions see below), but these two are actually the same language (apart from very minor differences).
From an unofficial point of view, things are even more complicated. Most Chinese (including the Chinese political leaders themselves) do not speak Mandarin with a Beijing accent, and there are many "local" variations of Mandarin, such as "Taiwan Mandarin".
Ever since the first Westerners entered China, Mandarin has been the subject of their interest and they tried to learn it and analyze it linguistically. But it soon became apparent that the Chinese characters had to be supplemented by some kind of phonetic transcription to record their pronunciation. Several systems were proposed; the first one to be widely accepted was the Wade-Giles system, named after its 19th century inventors, which is still used sometimes today and from which the official Taiwanese transcription system is derived.
In the 20th century, Chinese linguists proposed some transcription systems, one of which even introduced a whole new syllabic alphabet (the Bopomofo system). The most successful of these systems was the Pinyin system, which was accepted as the official transcription system for Mandarin by the PRC in 1958 and later also by the UNO? and other international organizations, though Taiwan didn't take it over due to political reasons. Today, every denizen of the PRC has to learn this system in school, and there originally were plans for Pinyin to supersede the Chinese characters. These plans, however, proved to be impractical for reasons given in the "Chinese language" article.
Mandarin (like all Chinese dialects) is a tonal language. A syllable can be pronounced in one of four pitches or left toneless. Pronouncing it in different tones actually makes it a different syllable and changes its meanings. The different pitches are:
However, in speaking, certain tones are changed in certain contexts according to the rules of [tone sandhi]?.
The set of syllables is very small, since each syllable has to be constructed after the pattern "optional initial consonant followed by vowel followed by optional nasal". Not every possible syllable is actually used, so there are only a few hundred syllables. The implications of this are discussed in the Chinese language article as are the main features of Chinese (and hence Mandarin) grammar.
Due to the above-mentioned restricted set of syllables, Mandarin speakers experience great difficulties in pronouncing words from languages rich in consonant clusters, e.g. most European languages. Additionally, syllables that don't conform to the Mandarin pattern can't be transcribed into Chinese characters. There's an official system for approximating foreign words using characters, but this sometimes yields strange results and is mainly used for rendering foreign names.
For words of foreign origin that describe formerly unknown concepts and that are taken over into the Mandarin vocabulary, it is more common to coin a new Mandarin word. These new words usually consist of one or more phonetic syllables and one giving the word's "subject" (compare this to the composition mode for characters!). The Mandarin word for "beer", e.g., is "pi2 jiu3" (for pronunciation issues see the Pinyin page). The first syllable ("pi") is a phonetic rendering, whereas the second syllable is the Mandarin word for "alcoholic beverage".
Since this way of incorporating foreign words is very cumbersome, the Chinese tend to invent their own words for technical innovations (the word for "train", e.g., means "fire vehicle"); so the international set of technical expressions deriving from Latin and Greek isn't found in Mandarin.
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