A contest is a timed competition to make as many contacts as possible, usually with as many different places as possible, within a fixed period (often 24 or 48 hours, sometimes just a few). Contests are short, fast and efficient: each contact is a quick exchange of a few details. They are among the busiest times on the bands.
Anatomy of a contact
Illustrative: the exchange is different in every contest. 5NN is the CW shorthand for the report 599.
Each contest defines its exchange: the information both sides must send for the contact to count, for example a signal report plus a serial number, a state or section, a grid square, or a name. It also defines who may contact whom, which bands and modes are in play, and how contacts are scored. Check the rules for each contest; they change from year to year.
Sending only the exchange is good contest practice. Skip the small talk, and do not add "please copy" or work the same station twice to be sure it is in their log.
Scoring and strategy
Most contests multiply two things: a number of QSO points (what each contact is worth) and a number of multipliers (distinct places, bands or other things the contest rewards). A rough shape:
That is why a distant new multiplier is worth more than another nearby station, and why rate (contacts per hour) is only half the story.
Most operators mix both: run while the rate is good, then hunt for stations they still need.
Other choices: which band to be on at which hour (higher bands during the day, lower ones at night, following propagation), which category to enter (single operator, multi-operator, low power or QRP, assisted or not), and how much antenna you can bring to bear. Contests skip some bands; HF contests generally avoid 30, 17 and 12 m.
No contests on 30 m. In a VHF/UHF contest, go to the weak-signal segment.
Who it is for
Casual entrants make a handful of contacts and send a log. Every contact helps the stations that need your multiplier.
Serious competitors build big antenna systems and operate for the whole weekend. Many contests also have low-power and casual categories.
Anyone testing a station can use a contest for a high-density test of antennas and receivers.
You must still identify your station as the FCC requires, whatever the contest says, and keep your signal clean. A contest is no excuse for a wide, splattering signal: see On-air etiquette.