Basically, Glasscode is a community discussion engine. (It is no longer a site, since the DynDNS move, and glasscode.half-empty.org does not exist.) Glasscode's main purpose is to power half-empty.
Discussion in Glasscode consists of Ideas and Comments. Ideas are top-level, and Comments are either attached to an Idea or to another Comment, similar to how articles and comments work on Slashdot.
All Ideas are in one Category or another (ie. Art, Computers, etc.). Every Category has a page showing Ideas: new, "hot", "high", "luck", and "old". New Ideas are just that: ones that have been posted recently, in chronological order. Hot Ideas are ones that have been commented on recently, in chronological order (by last comment posting). High Ideas are ones that have been highly rated (see below). Luck Ideas are randomly selected Ideas, and Old Ideas are ones that are about to be archived (see below).
Every Glasscode user has a certain number of points that they risk on Ideas and Comments. This is always a percentage of your total points. You must risk more points for Ideas than Comments, and newer users generally must risk a higher percentage than more experienced users. After an Idea or Comment is posted, there is a period of time (on half-empty, about two days) during which any and all users can rate it, either with a plus, neutral, or minus. A plus vote increases the Idea's or Comment's rating by one and counts as one vote. A minus vote decreases the rating by one and also counts as one vote. A neutral does not affect the rating and counts as a fraction of a vote (on half-empty, one-fifth). After the rating period is over, the points risked on the Idea or Comment are freed and the user can gain or lose up to as many points as were risked, based on their final rating. So, if you risked 3600 points, you could get your 3600 back and gain an additional 3600, or you could lose that original 3600, or anywhere in between.
After the rating period, an Idea sticks around on the site for a while longer, up to three months, so that it can be Commented on more. Even if the Idea can't be rated, its Comments can be (during their rating period). After this time is up, no more Comments can be made and the Idea is archived. At archival time, the entire page is turned into static HTML, freeing a lot of data from the database, and is generally inaccessable to the site.
The general point of this whole Glasscode rating system is to get rid of trolls. People that are consistently rated negatively will lose points, and thus their ability to post. (There is a minimum number of points necessary to post Ideas and Comments, so at low numbers of points the percentages no longer apply.) It works fairly well.
Also, all users on the site are divided into tiers, based rougly on the statistics of the user population. In general, all the trolls are lumped down in the bottom tiers and the most active users are in the top tiers. The percentage cost for posting is lower for higher tiers, so they have less growth potential but more posting potential.
If an Idea gets a total negative rating of a certain value (on half-empty, -5), it is dumped into the "Troll" category. As many people filter out the Troll category (category filtering is an option), it makes the idea invisible to many users. There is a more complicated system for Comments, where if a user consistently posts a series of negatively-rated comments, those comments can get deleted, along with any responses to them. High-tier users get a rating bonus that doesn't affect their point returns but helps prevent this from happening to Ideas and Comment they post. In general, it's not important.
Recently, users see a value called Radiance more often than their points. Since you always risk a percentage of points, your points grow exponentially. This leads to the top user having hundreds of thousands of points, while new users have, say, 60. Radiance is basically log(points) - log(starting points), and so it grows linearly, if you have consistent posting volume and quality. (I take personal credit for devising this system. Nebby, of course, coded it.)
There are, of course, a whole slew of additional features available for Glasscode, and I'm sure there are nuances of the system I haven't covered. There are Glasstags, which allow linking to user pages, Ideas, and Comments. There are also a number of Glassboxes, which are pretty much like Slashboxes. They can show you tiers, top users, favorite ideas, news on other sites, the chatterbox, etc., etc. I'm convinced one of them brews coffee and the other brings you your morning paper. But, I digress.
Additionally, the Glasscode creator, nebby, has plans for a new, mathematically simpler system. More about it can be read at half-empty.org.