Cell bodies of the reticular activating system are grouped in the brain stem, just behind the pons and in front of the cerebellum. Their axons reticulate out from there to various parts of the thalamus and cerebral cortex, providing the basis for the area's name. This is an interesting configuration, given that the cerebral cortex is relatively recent with respect to evolution, while the brain stem's design was finalized (or so one would think) long before. Also, its fairly fixed positioning in the brain stem tends to make it vulnerable to injury when the fairly mobile cerebrum moves sharply, as in a car accident, etc.

Most RAS neurons release acetylcholine at their synapses, which acts to sensitize the neurons which take it up. Because of this, along with the scarcity of RAS neurons (numbering in the thousands), we know that the RAS is not involved in cognition or information processing, but simply acts as an enabler for it.

Probably the best way to think of the RAS's functionality is to consider it in charge of the brain's tonic arousal. That is, in the same way the somatic nervous system maintains muscle tone, keeping the muscles at the right amount of tension to flex or relax at will and avoid cramping up, the RAS gives the cerebral cortex some baseline sensitivity to keep it awake and at work. Hence, it is the lowest level of attention control, in that an insufficiently activated brain can attend to nothing. One theory says that overactivation of the RAS leads to hypersensitivity in the cerebral cortex, and further is responsible for Attention Deficit Disorder; I would guess that ADD/ADHD's cause has even more to do with the disease's differing interneural connectivity and dopamine levels, but what do I know.

As the basic regulator of consciousness, damage to the RAS can lead to the ultimate consciousness disorder: coma. Any number of things can bring coma on, including the physical trauma mentioned above, swelling caused by trauma to other areas, stroke, tumor, and so forth. When one of these damages the RAS, or it is otherwise made unable to do its work of activation, all of the brain areas it regulates can no longer function normally. While they may still be getting input from the brain stem and other areas, there simply isn't enough sensitivity to perform cognition, let alone send down a strong enough signal for conscious bodily control. Coma has varying degrees, from deep enough that no amount of pain or loud noise can cause a reaction, to so light that there is a grip reflex or fluttering eyelids.

Notably, even in light layers of coma the victim is not conscious, and is reacting to their hand being touched reflexively rather than as communication -- RAS damage is different from extensive paralysis, where communication may be possible through blinked eyelids or whatnot. Even so, recovery from coma is not well understood and always somewhat possible, so most doctors are unwilling to "pull the plug" no matter how deep the coma seems.

As Magenta covers above, the RAS also takes part in the sleep cycle, primarily through its regulation of the thalamus. During the three deeper stages of sleep, it switches off much of its activity, so the thalamus becomes less receptive to outside stimuli, which helps the sleeper stay asleep. Interestingly, during REM sleep the reticular activating system becomes active again, "waking up" the thalamus and cerebral cortex. Why we don't wake up at this point isn't perfectly understood, but probably has something to do with inhibition from the raphe nucleus and the locus ceruleus. In other words, the reticular activating system is not completely responsible for enabling dreaming sleep.