From the anime/manga:
Doujutsu - power born in the eyes and release from the pupils that can read all types of techniques: genjutsu (illusion), taijutsu (body), and ninjutsu (stealth)
Sharingan (type of doujutsu) - mirror/copy wheel eye, has the ability not only to read, but also copy movements and techniques; appears in only a few select members of the Uchiba clan
Advanced techniques by Itachi:
Notes: If a rock frog lives in the mountains and breathes fire, it can probably withstand volcano lava temperatures of 2100 degrees Fahrenheit. The Amaterasu attack can blast through the rock frog esophagus like a grenade blast of 4000-5000F !
Basic aspects of the sharingan:
1. The ability to see movement in detail is much like the strobe effect in the real world where the detail of motion is revealed by breaking up the visual input via pulsed lighting or using a fast shutter speed. The 3 rotating dots is analogous to the pulsed lighting/shutter as they in effect break up the entering light while rotating.
2. Once the details are observed, the ability to copy movements can be explained via a photographic memory and exceptional physical coordination. Those with the sharingan may have faster synaptic relays from the optic nerve to the cerebral cortex and the cerebellum. The inability to copy advanced bloodline techniques is due to the lack of similar physiology inherent in individual advanced bloodlines.
3. The hypnotic ability of the sharingan is based on its 3 rotating dots similar to tools used by hypnotists - one of the most common is the black and white spiral which rotates and mesmerizes the viewer.
4. The sharingan can not only detect illusions, but also protect the user to a limited extent, and project illusions.
Detection: The sharingan can detect chakra and see through illusion clones (bunshin) which do not have chakra like shadow clones (kage bunshin).
Protection: Kakashi indicates that his sharingan can protect him from Itachi's genjutsu (didn't work since Itachi's too powerful).
Projection: Kakashi projects an image of Zabuza; Itachi sends Sasuke back to the day their clan is killed; Itachi tortures Kakashi for 3 days in one second.
Detection and protection work together. If the user can identify a genjutsu he can will his mind against its effects similar to the idea of conditioning the mind against brain washing techniques. Projection and hypnotism work together. Once the target is hypnotized, the mind is susceptible to suggestion.