Ughhhhh.....that would take far longer to answer than I'd like to spend writing here. Furthermore, I don't have to; there are wonderfully complete explanations lying around on the net already, just a Google search away. Here's one:
SMPTE
As for establishing a good tempo, that can be tricky, as you've no doubt seen. Some clips will suggest a tempo themselves simply based on the action on-screen, but others are completely irregular and the hit points do not really fit into any rhythmic sequence.
In that case, you get to flash your little artistic license badge and make some executive decisions. You can either use a completely irregular time signature and constantly change it so that it follows the music (tedious, difficult and often sounds bad, though in some cases it's the most appropriate method.) or you can opt to disregard some of the hit points entirely so that you can fit everything to a set tempo and rhythm.
The latter method tends to work best, so I'd recommend that. Essentially, you're prioritizing so that the less-important hits are simply dropped in favour of a consistent background rhythm.
Either way, that's a more thorough explanation...any more thorough almost merits being a full-out lesson...hmmm....
