For those of you who have had a Mac for a while, this may seem trivial, but for recent converts to Mac OS X, installing applications is a paradigm switch, hence the reason for this HowTo.

Applications in OS X compared to Windows.
In Windows, most applications are installed by running (double clicking) a setup.exe file.  The setup program then copies the  files to the right locations, installs DLLs for the system, and sets registry settings.  The registry is a big, single database where all settings in windows are stored, which is why after a year or so, Windows inevitably slows down.

In Mac OS X, all of the files required to run a program are packaged in a .APP application package (if you go to your Applications Folder and right click on an application, you will see a menu item called "Show Contents", selecting that will show you all the files).  Settings for individuals are stored in the user's Library in separate .PLIST (preference list) files.  Since there is no single repository, this makes installing and uninstalling applications very easy.

In general, there are two ways to install an application onto a Mac OS X computer, and I will outline them below.  Most applications are delivered in a Disk Image (.dmg) file.  This is a software file that the Mac treats like a CD or Hard disk.  Once you have the .dmg file, double click it and your Mac will mount the file and open it up.

Drag and Drop into Applications Folder
The most common method of installing an application is to simply drag the application file (.APP) from the disk image into your Applications folders.  Yes it really is that simple.  Many applications provide a shortcut to your Applications folder right in the disk image (see screen shot below).  If that is the case, you can drag the application right onto the short cut.  If the disk image does not have a shortcut to the Applications folder, open up a Finder window and drag the application file onto the Applications folder in the finder window.   Note, if you just want to try the application without loading it to your hard disk, you can typically double click the application in the disk image and it will run without installing (This is a really nice feature of the Mac when compared to Windows).

Example Disk Image with Drag and Drop to Application Folder Shortcut

Example Disk Image without Shortcut ... Drag and Drop to Application Folder in Finder

Installing an Application using a Package Installer
For more complicated applications, or for application suites (which may contain more than one application), You install the application using an Application Package installer.  A package installer looks like a open cardboard box. This is very similar to a Windows Setup.exe file.  The package installer will double check system requirements and perform the installation.  All you have to do is double click it.  Most applications that come with a package installer, will also have an uninstaller included to make it easy to uninstall the application.  If you don't want to keep the whole download, you can copy the uninstaller package to your Applications folder or another location.

Example Disk Image with a package installer

Related HOWTOs:
List of Mac OS X HowTo Guides
HowTo Uninstall Applications on Mac OS X