Intonation: C or D

I think intonation involves the guitar being in tune with itself. Ie: you tune the guitar one way, but notice that when you doublecheck it another way, it is out of tune.
So, you take it to a guitar store and tell them to fix it.
The end.

It also has something to do with holding the guitar up, putting your eye level with the bridge, squinting down the neck to check whether the neck is twisted and pronouncing if the intonation is "fucked" or not. This will make you look knowledgable in guitar shops on Denmark St. (But it still won't stop condescending remarks about GURLS, unfortunately.)

Slight problems with intonation, you can fix yourself by playing with the little screws that fasten your strings/tremolo arm to the bridge. But fancier intonation problems involve mucking about with the truss rod, and I know people who have totally fucked their guitars and/or snapped the necks off doing that. So refer to Sarah's answer if that is the case.

Intonation has nothing to do with a guitar's action (eg string height or neck calibration). If you walk into a shop and check to make sure the truss rod is straight and say the guitar has good intonation, the dorks behind the counter will snicker at you.

A guitar with good intonation just means that an open E string will actually be an octave lower than the "E" that is played at the 12th fret. IOW the guitar is in tune no matter where you play on the neck. A guitar with bad intonation can be in tune below the 12th fret and out of tune above it.

Intonation is a good thing because rock bands that are unintentionally out of tune = dud.

the height of your action will have a miniscule effect on how you should have your bridge saddles adjusted, and the relief in the neck is part and parcel of that. OK so we are talking MINISCULE here but if you do a lot of string bending with a heavy set then you are going to require a higher action esp if you have a tight vintage style neck radius and that WILL have an effect on the correct postion for the bridge saddles. i'm being REALLY anal here!! BUT - change your strings regular - you'll never get good intonation w/ old rusty strings which all the kids (& young adults) come into the shop i work and their strings are shot. FRESH STRINGS PLEASE. loosen a string before you adjust yr bridge saddles one way or t'other then retune. gotta say - i check @ the 19th fret on the string above for the octave note and i do it with my ears coz 440hz etc just don't mean shit to me. i only play really shit beefheart improv punk jazz metal CRAP but off intonation REALLY bugs the shit out of me

granted, but when was the last time you looked down the neck of a guitar to determine whether or not you need to adjust the intonation?

yeah - yr right coz the answer to that would be NEVER!

I'm usually quite glad when my biennial intonation mess-up comes round, because it provides an excuse to spend £30 getting it fixed, thus getting the strings changed without me having to touch them.