Everyone knows what hyphenation is: we see it in most books we read, and (if we're alert) will spot occasional ridiculous mis-hyphenation (at one time, British newspapers were a fertile source).
Hyphenation styles are culturally-determined, and the same language may be hyphenated differently in different countries - for example, British and American styles of hyphenation of English are very different. As a result, a typesetting system that is not restricted to a single language at a single locale needs to be able to change its hyphenation rules from time to time.
TeX uses a pretty good system for hyphenation (originally designed
by Frank Liang - you may view his
Ph.D. thesis online) and while
it's capable of missing “sensible” hyphenation points, it seldom
selects grossly wrong ones. The
algorithm matches candidates for hyphenation against a set of
“hyphenation patterns”. The candidates for hyphenation must be
sequences of letters (or other single characters that TeX may be
persuaded to think of as letters). Non-letters interrupt hyphenation;
this applies to TeX's
\accent primitive (as in “système”)
just as much as the exclamation in “syst!eme”.
(Hyphenation takes place on the characters “sent to the printer”.
The problem with
\accent is avoided -in LaTeX - by the use
of the fontenc package, as discussed in
“Accented words aren't hyphenated”.)
Sets of hyphenation patterns are usually derived from analysis of a list of valid hyphenations (the process of derivation, using a tool called patgen, is not ordinarily a sport to be played by ordinary mortals).
The patterns for the languages a TeX system is going to deal with may only be loaded when the system is installed. To change the set of hyphenation patterns recognised by a TeX-based or XeTeX system, a partial reinstallation is necessary (note that LuaTeX relaxes this constraint).
TeX provides two “user-level” commands for control of
\language (which selects a hyphenation style), and
\hyphenation (which gives explicit instructions to the hyphenation
engine, overriding the effect of the patterns).