In Jewish sources, it is first mentioned in the Talmud, and mefarshim ascribe certain verses in the Bible to its effects, such as the prohibition of counting people directly. Later sages attribute its power to G-d opening a book and reassessing whether the person actually deserves the good fortune. Since He might then retract the good fortune, the ayin hara might cause someone to suffer ill fortune to compensate. In mystical terms, the ayin hara is some independent malevalent force. Defenses include spitting, wearing garlic, saying "no ayin hara" (bli ayin hara, kein ayin hara), or minimizing the cause of jealousy, as can be heard daily on any Jewish street in the world. Here is an example of such an exchange:
Yid A: You have such a beautiful mink coat, kein ayin hara.
Yid B: I got it on sale at a flea market. Someone bought it for me as a gift, $15.99, ptui!
Yid A: Oh my G-d, did you just spit on my shoe?!
Yid B: Small price to pay to defend myself from an ayin hara, chas v'shalom
Yid A: Yes, I agree.
Many sages understand the ayin hara in a rational way. It simply means that a person is not generous. In other words, he looks at others with a bad eye, not deserving of his largesse. The concept is akin to the halacha of ayin tov and ayin hara, in Trumah for example. A baal ayin tov gives 1/40, a benoni 1/50, a baal ayin hara 1/60.
In the case of Rashi al haTorah, he brings several instances of the ayin hara, in the independent force interpretation. Whether Rashi meant this literally or not, or whether he was just using this to resolve the pasukim at the child level is another pilpul. But, this whammy seems to be a universal part of frum culture from a very ancient base.
So, what can we gain or lose from it? Can we threaten people with an ayin hara if we do not like them? Can a Beis Din administer an ayin hara, in lieu of other punishment? (Mi sh'para, which the Beis Din can adminsiter for unscrupulous, but technically exempt actions can be understood as simple embarrassment, so it cannot be an example here.) Are there special mekubalim that can remove the ayin hara? Is there any way to discern whether a person is affected by an ayin hara or whether he is just a plain unencumbered shlemazel? Can I charge money to perform the service of removing ayin hara? Can I charge to train people to give an ayin hara? Does it work on goyim (as they believe it does)? If it does, and we had this awesome power, why did we let them run all over us for all those centuries?