Yes, it's a gift card equal to a one day ticket (child or adult, depending on who's birthday it is). You don't have to use it all that day - if it has any expiration, I don't know what it is - I don't think it does. My daughter used hers all week on our trip.
As to where - it's mostly good for merchandise, but it worked in every store at every park & resort that we tried. See Cheshire Figment's ticket sticky at the top of the page here - he has a whole post about the details on the card, I think.
And yes, you can only get it on your birthday - you have to show picture ID/proof of birthdate and your park ticket to get it (we got ours at the Will Call window at DHS, outside the turnstiles).