in my experience, a pinata in a big thing in the shape of an animal or something, and it's filled with lollies and stuff, then hung from the ceiling. you blindfold someone and they get a stick and try to beat the pinata until it splits open and the candy falls out.
And covered with tissue paper, so they're all colorful and stuff, and everyone takes turns being blindfolded and trying to hit the pinata, and you have to watch out in case someone misses wildly and starts swinging at bystanders. When it breaks, everyone scrambles to get candy. It's quite fun.
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They're usually made out of paper mache.
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:)
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Oh, and what the others said about it. I think it's a either a Spanish or Mexican custom.
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