Sharpening is a technique in Photoshop that can really make a photo "pop" (a common term photographers use to mean making a good photo better.)
It works by increasing the contrast of edges found in the photograph, thus giving the appearance of a sharper or clearer photograph.
It should be said, though, that using the sharpening filter cannot make a blurry, or out-of-focus photo, into a sharp, or in-focus photo. Despite its reputation for making photos look better, Photoshop can't salvage poorly focused photographs.
Sharpening is what is called a "filter" in Photoshop, therefore it can be found in under the filters menu.
In Adobe Photoshop CS3, a new sharpening filter was added called Smart Sharpen.
Smart Sharpen is very similar to the older tool "Unsharp Mask," except that it adds a few more options and adjustments to give it a finer level of granularity. Despite keeping the Unsharp Mask filter for legacy users who are more familiar with it, Smart Sharpen can do everything Unsharp Mask can, plus a little more.
The Smart Sharpen tool offers a closeup preview of the photo on the left with the filter effect added. You can easily compare this to the original by either clicking the "Preview" checkbox or by clicking on the preview and dragging around.
The amount specifies the amount of sharpening to add to the photo. Remember, how sharpening works is by looking for edges in your photo and increasing the contrast. It's really easy to "over sharpen" a photo, giving the edges an odd halo effect. Radius specifies the distance in pixels from the edge the sharpening filter should reach. Generally the blurrier the photo is, the more radius you will have to use. Photos that are in focus will need less radius.
Remove specifies the type of blur you are trying to remove. Gaussian refers to a general softness, lens blur refers to out-of-focus blur, and motion blur refers to photos where a subject was moving too fast and became blurry in part of the photo. Picking motion blur allows you to specify the angle of the motion blur.
More accurate means Photoshop will use more processing power to determine the sharpening preview and conduct the sharpening filter. Turning this checkbox off can help if you are working on a very slow computer.
As with most tools in Photoshop, there are no "correct" combination of values to issue that will work with every photo. Each photo is unique and will require a different combination of values. The preview allows you to experiment with different values so that you can achieve the best production possible.