Vinylmations are small (usually 3") figures. They all have the same basic shape - a Mickey figure. The design takes that figure and overlays other characters onto it. So for example, imagine Donald Duck, but drawn on a Mickey shape.
Disney has a pretty good website with lots of pictures.
http://eventservices.disney.go.com/static/vinylmation/index.html
Like pins, you can trade the Vinylmations at various locations throughout the theme parks and resort hotels. There are two ways to trade - either with the mystery box (pick a number and you don't know what you'll get) or with the clear box (where you see which one you want and trade for that one).
Almost all vinylmations are tradeable; the only exception are the ones that you've customized (i.e., drawn on or designed yourself).
The costs were $10 each, but the most recent figures have gone up in price (I think they're $12 now). In most cases, when you buy a figure, it's a 'blind' buy - you don't know which one you're getting until you open the box.
Not counting the special series, the typical series contains 11 known designs and one mystery (chaser). The known designs are shown on in the picture on the box, but the mystery design is not (so theoretically you won't know what it looks like). If you bought a complete flat, then there will be two of all the known designs, one chaser, and one random selection (out of the known).
Trading can be a lot of fun, but unlike pins, the Vinylmations weigh more and are bulkier, so you can't really carry very many.