A familiar is a creature that serves as aide and companion to a wizard, typically summoned by the spell find familiar. Familiars are typically small creatures, such as cats, frogs, ferrets, crows, hawks, snakes, owls, ravens, toads, weasels, or even mice. A creature acting as a familiar can benefit a wizard, conveying its sensory powers to its master, conversing with him, and serving as a guard/scout/spy as well. A wizard can have only one familiar at a time, however, and he has no control over what sort of creature answers the summoning, if any at all come.
The wizard has an empathic link with the familiar and can issue it mental commands at a distance of up to 1 mile. Note that empathic responses from the familiar are generally fairly basic--while able to communicate simple thoughts, these are often overwhelmed by instinctual responses. Thus, a ferret familiar spying on a band of orcs in the woods might lose its train of thought upon sighting a mouse. Certainly its communications to its master would be tinged with fear of the "big ones" it was spying on! The caster cannot see through the familiar's eyes.
If separated from the caster, the familiar dies after a few days. Its death weakens the wizard, and may even kill him or her. The power of the conjuration is such that it can be attempted but once per year. Note that most familiars are not inherently magical, nor does a dispel magic spell send them away.
Deliberate mistreatment, failure to feed and care for the familiar, or continuous unreasonable demands have adverse effects on the familiar's relationship with its master. Purposely arranging the death of one's own familiar incurs great disfavor from certain powerful entities, with dire results.
Note: The concept of familiars in this form originally appeared in the 2nd Edition Player's Handbook for Advanced Dungeons & Dragons from TSR. Its use here is for the purposes of providing context for the campaign only.