At the time that my husband & I tried the Magic Your Way Dining Plan, this was an amazing option provided by Disney to have all your meals/snacks pre-paid so that when you arrived, all you had to do was worry about where you wanted to eat out of all the many restaurant choices.
The Disney Dining Plan is a meal option that gives each person in your party, 1 sit down meal, 1 counter-service meal & 1 snack per day for a cost of $38.99. This included all taxes & gratuity. For your sit down meal, you received an appetizer, entree, drink & dessert. Your counter service meal included an entree, drink & dessert and a snack consists of pretty much anything under $4.00. At the end of your meal, you just present your key-to-the world pass to your server, who would thing ring the meal up as if you were paying with a credit card. Then on the receipt it shows you how many of each type of meal you have left on your plan. You get one of each type of meal for each night of your stay.
Update On May 07, 2008: For 2008, the new Magic Your Way Dining Plan is a little different from when we tried it back in 2005. They have now lowered the price of the plan for adults from $38.99 per night to $37.99 per night & $9.99 per night for children. Before, not only was an appetizer included in the table service meal, but also an automatic 18% tip was included. Now, neither one is included in the dining plan, so if you want an appetizer, it will cost you extra & you now have to manually figure in the tip for your server.