Byakugan (type of doujutsu) - "white eye" - an eye of insight; apparently appears in all the Hyuuga clan members; powers can be sealed at death via a cursed seal
The origin of the Uchiha clan/sharingan, is said to have evolved from the Hyuuga clan/byakugan. The byakugan is a special eye similar to the sharingan, but the ability of "insight" exceeds the sharingan as the sharingan is unable to see the chakra holes (tenketsu).
The byakugan in its normal state is plain white, with no apparent iris or pupil. In its activated state, the outline of the iris and pupil can be seen and the veins around the eyes bulge out. The bulging veins are probably due to a concentration of chakra to the eyes.
(Neji is often associated with birds which lends the following analogies between the byakugan and birds' eyes some validity.)
1. The byakugan can not only see an opponent's chakra like the sharingan, it also has the ability to see through solid objects, akin to Superman's so-called x-ray vision.
The human eye can detect electromagnetic radiation wavelengths in the range of 390nm-780nm (visible light - from violet to red). Longer wavelengths in the infrared region can be detected by thermal detectors and seen with special filters such as infrared goggles. Shorter wavelengths in the ultraviolet region can also be viewed with filters and special detectors. Rattlesnakes have infrared sensory organs (heat sensitive retina) to detect and hunt warm-blooded prey while various insects and birds have ultraviolet vision.
X-rays are in the range 100nm-10nm, and beyond that are gamma rays. X-rays are produced by the acceleration of electrons while gamma rays are emitted from the nucleus of an unstable atom undergoing radioactive decay. In medical applications, x-rays pass through the body and are recorded onto film. The light and dark areas on the film correspond to regions of different physical density. Bone contains denser elements than soft tissues, so bone absorbs more x-rays and appear white on film. Where the x-rays pass through and strike the film, it turns dark. In nuclear medicine imaging, a radioactive substance is injected into the patient's bloodstream. When the patient is placed in front of the gamma-ray detector, an image is formed of the pattern of the radiation being emitted from the patient's body. The areas where the radiation is most intense would appear to be bright on the image.
X-rays and gamma rays appear in space but do not reach our breatheable atmosphere. Normally the term "x-ray" does not actually refer to the ability to detect x-rays, but rather the ability to see through clothes to the body, or see into the body, or see live creatures through certain materials. So called "x-ray vision" surveillance cameras and goggles are actually infrared detectors which detect body heat.
The byakugan appears to have a wide range of detectable wavelengths from ultraviolet to infrared. The eyes may contain special rods and cones sensitive to these wavelengths, or perhaps a special lens acting as a filter to shift wavelengths over to the visible range. Although the byakugan can see through organic matter (trees, animals) it is not known whether it can see through dense metals such as lead, Superman's failing. It does not appear to have the ability to see through inorganic material such as earth/rocks as Neji could not see Jiroubou while imprisoned in the earth dome. However, in later episodes and after the time skip in the manga, he does appear to have the ability to see through rocks.
Related article (probably a hoax): A Girl with an X-ray vision 01/14/2004
2. The ability to see distance far away with clarity is exemplified by the ability of animals to detect their prey from great distances. The byakugan can see with telescopic clarity a distance of at least 1km (Hinata sees Gaara during the second chuunin exam).
Raptors, aka birds of prey (eagles, hawks and falcons), can see up to 8 times more clearly than the human eye and can detect prey as far as a mile away. A bird's large eyes let in the maximum amount of light, and allow for a large image. If a retinal image is spread over a greater number of visual cells, there will be greater resolution to the detail in the image. Raptor eyes remain focused by rapidly changing the lens curvature (accommodation).
Raptors have front facing eyes similar to humans and have binocular vision where the fields of view of the left and right eye overlap, allowing greater detail. Raptors, with their wide binocular field of view, have both a central and lateral fovea (small region of the retina where the concentration of rods and cones is the highest and therefore vision is the sharpest). As a result, a substantial proportion of their visual field projects on the most visually receptive parts of the retina. Raptors also have the largest and most elaborate pecten of all the birds. Pecten is a thin, greatly folded tissue extending from the retina to the lens. The pecten supplies nutrients and oxygen throughout the vitreous humour of the eye, thereby reducing the number of blood vessels in the retina. With fewer blood vessels to scatter light coming into the eye, raptor vision has evolved to be the sharpest vision known among all organisms.
The byakugan is relatively larger than other eyes as it appears that the entire eye orbit consists of the byakugan, which would then have a larger retina and better resolution. It's possible that the byakugan also contains multiple fovea and an elaborate pecten system similar to birds of prey.
An extension of telescopic vision is microscopic vision. The byakugan can see the tenketsu with precision which implies that it has the ability of miscroscopic vision.
3. The Byakugan field of vision is almost 360 degrees and can detect all enemy attacks within a range of 50m radius (Neji's range). However, there is a blind spot extending conically out from the first thoracic vertebra (lower neck/upper back area).
Prey animals (herbivores) and most birds normally have orbits located on the side of the skull. Each eye has a field of vision of almost 180 degrees and with both eyes they almost have a 360 degree field of vision. Humans, predators, and birds of prey have a 180-degree forward-facing field of vision. But all birds can turn the head such that 360 degree vision is achieved.
The byakugan has near 360 degree vision without turning the head. It's possible that in its activated state it can detect subtle reflections of light interactions coming from behind. (I give up on this one.)
4. The ability to appear to read people's minds comes from the ability to read body language and biological functions such as heart rate, galvanic skin response (lie detectors), perspiration, and blood pressure. An example of reading body language is the ability to "tell" whether someone is bluffing during poker. A "tell" in poker is basically body language or habit that is assumed when someone is bluffing or is holding a good hand. There are books written on this strategy. The user of the byakugan, with its ability to see into the body, can combine observations with biological functions to infer the thoughts of the target.
Techniques associated with the Byakugan
Hakke rokujuuyonshou - divination field, 64 strikes - The 64 hands of divination is a jyuuken technique that effectively seals off all the tenketsu (chakra holes, similar to acupuncture points/pressure points)
The basis of the offensive and defensive techniques used by the Hyuuga clan is the ability to see and control the chakra circulatory system. The chakra circulatory system is similar to the blood vessels that circulate blood and is closely intertwined with the internal organs that mold chakra. If the chakra circulatory system is attacked, damage also affects the internal organs. By using jyuuken, direct damage can be done to the enemy's chakra circulatory system. There are 361 points known as chakra holes (tenketsu), each as small as a needle. By hitting them accurately, the flow of chakra can be stopped or increased. Chakra can also be formed into a precise needle and used like a precision scalpel. Normally controlling the amount of chakra released from the chakra holes is difficult and even a jounin can release only a small amount from his hands and feet for a special move.