What exactly is a stock split and how does it affect shareholders?

The board of a company decides to split the shares, thereby reducing the price. Let's say the price of the stock has risen to $100. If they do a 2 for 1 split, they will mail each shareholder one share for each share that they own. So at the end of the day, the number of shares in shareholder hands has doubled, and the price is halved. It doesn't really effect the value that the shareholders own.