
Nen is an energy created within the body (like chi) that can be deployed and manipulated in a variety of ways by a skilled user. Within the series, this energy is referred to as one's aura. The term "Nen" itself can refer to both the energy itself and the skill of using it.
Creation
Nen is an energy produced by all living bodies, it is considered a vital energy that results from simply being alive. If one were to lose all their nen, it would be equivalent to using up all the energy that is keeping them alive, which would be fatal. The nen from all parts of the body has a tendency to flow together, producing one 'mass' of energy. This happens without the individual's awareness, and will simply leak out of their body slowly. The pores or points on the body where nen flows out from are called aura nodes.

Controlling and seeing
A nen user trains to manually open and close their aura nodes so that they can control the flow of nen. One can learn this process gradually, learning to control the aura nodes through meditation, or they can receive an influx of nen from an experienced user that forces these nodes open, forcing the new user to learn to control the flow or risk severe exhaustion and/or death. The second method is generally frowned upon as it very dangerous (although far quicker). Once one has opened their aura nodes, they will be able to see nen as an 'aura' that surrounds the body (this is because the nodes in their eyes are opened). It has also been hinted in the manga that some people are able to 'discover' and learn to manipulate their nen on their own, without any teaching or guidance from another nen-user.

What affects Nen
Although the production of nen is unconscious and constant by all living beings, it is more than just 'leaky energy'. Nen carries with it the desires and emotions of the one who deploys it, which is what allows Nen to have incredible versatility to those who develop their skill at using it. Nen is also heavily influenced by mental condition and state. A basic application of this phenomenon is that one can channel their aggression or hatred into their nen and deploy it towards another person. The other person will then be able to feel that aggression as if it were physically palpable, and if unable to keep it from their own body by deploying their own nen, may be physically harmed by it.

Conscious strengthening of Nen
Nen responds to the goals and strengths of the desire of its user. As a result, a user can make a commitment that results in an increase in their abilities. If a user, for example, damages their own body in such a way that an individual skill seems more imposing when used, their nen will become correspondingly more powerful. It is also possible to increase the strength of an individual skill by imposing limits on it. For example, if a user consciously decides something along the lines of "I will only use this skill on Thursdays," or "I will only use this skill against short people," and manage to abide by the rule, that particular skill will become stronger.
Theoretically, the more restrictive the condition, the greater the enhancement in power. It is also implied that restrictions which carry great meaning, or emotional value also bring about a greater benefit.
Furthermore, restrictions which contain some sort of 'punishment' (i.e. "I will die should I break this rule") will strengthen the ability more.
One example of this is the character Kurapika, who swore by death not to use one ability of his, called "chain jail", on anyone but a group known as the Phantom Troupe, more commonly known as the "spiders".
Sensing Nen
When one has developed use of their nen, they become sensitive to the presence of other beings by their deployment of nen. Since every living being creates nen subconsciously, it is a useful skill for those tracking or hunting (both animate and inanimate things). It is also useful in combat, because one can judge the location and relative strength of opponents by the output of their nen. To counter this, techniques that minimize nen output like Zetsu or In are used.
Geniuses
Nen is like any other skill, in that there are those who will learn it faster than others. There are also individuals that can use facilities of nen without having any formal training. This can be anything from being able to use the basic techniques of nen without even realising it, or unconsciously developing a unique nen ability that can be used without the user really understanding how or why they are able to do so.