Head lice come in three stages: egg (called a nit), nymph (immature lice) and adult. (See the head lice life cycle.)
A head louse (the single form of lice) is a human parasite that lives off a person's blood. It likes to live close to its food source (it can't survive more than 24-48 hours off its host), so it makes its home close to the scalp. It has six claws that allow it to crawl around from hair strand to hair strand.
A female adult louse will lay eggs (about 88 during her lifetime) within a quarter inch (~0.5 cm) of the scalp, attaching the eggs firmly to a hair shaft. Those eggs are called nits, and unless they are removed with a lice comb or are killed some other way, they will hatch into nymphs. Nymphs crawl down to the scalp and feed off the host. Nymphs then grow into adult lice.