A dog microchip is a rice-grain size metal chip that stores an indentification number unique to your dog. The dog microchip gets implanted under the dog's skin behind the shoulder blades. Implant dog microchip procedure is usually safe and painless, but if you have any concern, you can request your vet to do it when your dog is spayed or neutered and is under anesthesia. However, implant dog microchip during your dog is awake should not cause the dog any distress, nor the chip has any bad side effects.
Once the dog microchip is implanted, it can be scanned using a handheld device. The scanner will detect an ID number that is unique to this chip. Once dog microchip is implanted, you will be given information to register your dog and your contact information with a nation wide organization.

The benefits of implanting a microchip in your dog are numerous. We never expect anything bad to happen to our dogs, nor do we think we will ever let our dog out of sight or get separated from us. However, dogs get off their leashes, jump out of cars and run out of their homes and yards. If your dog is ever lost and brought into a shelter in the US, the first thing the personnel will do is scan for a microchip. As soon as a dog microchip is discovered, the shelter will contact the nationwide organization to get your contact information so that they can return your dog to you.
Vets also have this scanning device, so if anyone brings them a stray, vet can look for a dog microchip and get in touch with the dog's owner. Unfortunately some dogs are stolen. These dogs will not be taken to a vet for purpose of finding the rightful owner. Therefore it is wise to report the loss of your dog to the vet offices throughout the area, so that the staff can scan all dogs of the same breed coming into their office and potentially snag a dog snatcher.