Via Marc Ambinder, I see that Dan Balz has a very useful post on the mechanics of the Iowa caucuses. This may be the most important graf--and, for that matter, the most important thing you need to know about the caucuses in general:
Another distinguishing feature from a primary is that it pays to have some support in all 99 counties and all 1,784 precincts in the state, rather than having concentrated pockets of support in a few areas. Because of the rules and formulas used to apportion delegates, a candidate gets no extra benefit from overwhelming support in a precinct. Bill Bradley, for example, had very strong support in college towns but that was not reflected in the overall percentage of delegates he won in 2000 against Al Gore.
The caucus rules are pretty confusing--see here for a good explanation--but the bottom line is that, because delegates are to some extent apportioned geographically, small towns and rural areas end up having disproportionate influence. It's a bit like the way small states are over-represented in the electoral college (by virtue of their over-representation in the Senate). This is one reason people think Edwards is well-situated in Iowa (more so than the polls would suggest, in any case): He spent a lot of time organizing rural areas and small towns in 2004, which helped drive his second-place finish. He's presumably better organized than Obama and Clinton in those areas this time around.
Balz also has this interesting nugget:
One of the most interesting debates among Democrats in Iowa right now is the role college students may play in the caucuses. The early date for the caucuses means that college students will be at home and not on the campuses on caucus night in January. That appeared to be a blow for Obama, who is counting on significant help from college students.
But [Iowa Democratic Party political director Norm] Sterzenbach said college students could play an even more significant role this time because they will be spread more evenly around the state, rather than being on campus. "Everybody talks about college students are going to be disenfranchised and they're not going to be allowed to participate," he said. "It's actually going to be the exact opposite. College students can have a significantly higher impact now--by voting at home rather than on campus."
As above, a supporter is worth more in a rural area or a small town than in a populous area like Ames (home of Iowa State) or Iowa City (University of Iowa). The key is whether Obama will be able to effectively organize these students once they're dispersed.