Just wanted to add some info that wasn't covered by BigJ's awesome write up.
FRS and GMRS overlap the same frequencies, but GMRS allows for more wattage. FRS is Family Radio Service and GMRS is the General Mobile Radio Service. The FCC governs both of these, but only a license is needed for GMRS. It's not the same HAM license I or BigJ have, it's basically just a license you pay for and is good for 10 years.
The quiet codes that were referred to are actually Continuous Tone-Coded Squelch System or CTCSS. They are an inaudible tone that is played along with your transmission. Two radios that are set to the same CTCSS, or security code on FRS/GMRS, can talk and hear each other. The way is works is the radio is set to a CTCSS or security code and it only listens to and plays out received transmissions that have that CTCSS. Anything else on that frequency it ignores if it has a different CTCSS.
Yes, modifiying a radio to transmit out of band, like on FRS is illegal, but it's like speeding. It happens, just don't get caught.
I prefer MURS to FRS. MURS, or Multi Use Radio Service, is the old FRS that was available to us. The difference is that it's in the 2m band, so the waves propagate further as they are longer wavel lengths, and it's allowed up to 2 watts, so more power is more good! If you listen to the MURS frequencies, you'll hear Walmarts, Home Depots and the like.
HAM is fun and can be useful for great distances, depending on conditions and equipement. I was on Mt. Hood, sitting in my tent at 9000 feet, and talking to an IRLP repeater in Portland. I was able to make an IRLP call to a node near my home and talk to my wife and son, on a two way radio, but 2000 miles away.
