foursquare is one of the early entrants in a coming wave of location-based web services. Foursquare catalogs a huge list of venues in 100 cities around the globe: restaurants, movie theaters, museums, bars, etc. You checkin with the service as you visit these places, and the system tells you tips that other foursquare users have suggested about that location. It also (optionally) broadcasts your checkin to your friends, so you can arrange meetups or just learn about new spots by watching their activities. Currently you set up your friend lists on the foursquare web site, though it does provide a way to check whether any of your twitter, facebook, or GMail contacts are using foursquare.
An interesting aspect of foursquare is the gaming angle. Badges are awarded for a huge range of activities, for example four checkins in one day earns the "crunked" badge. It looks like a drunk happy face, though in my case no alcohol was involved: Children's Discovery Museum, a local park, Fry's Electronics, and a restaurant. As with stackoverflow, badges provide a way for the developers to reward proper use of the site which doesn't cost them any money.
Finally, there is Mayorship. The person who has checked in to a venue the most in the last 60 days is declared to be the Mayor. You can steal the Mayorship away from its current holder by visiting more often, which gives the site a competitive feeling. Apparently the competition for Mayorship of hot nightspots is intense, complete with accusations of cheating. An old saying about academia springs to mind: "On foursquare, tempers run high because the stakes are so small." Nonetheless, the Children's Discovery Museum Mayorship is mine. Don't even think about trying to take it.
A small number of business owners offer rewards to their foursquare mayor, typically on the order of a free drink. This hints at a route foursquare can take to monetize the site, by allowing businesses to reach out to patrons. The challenge will be to do this in a way that isn't creepy: a leaderboard to see how close I am to becoming Mayor would be fine, actively bugging me to visit more often would not be.
About SMS...
The best experience using the service is with a GPS-enabled smartphone. There are free apps available for iPhone and Android, and there is a mobile-optimized website for phones with a reasonable browser. Finally, there is SMS. As I still use an ancient DumbPhone, I use SMS. One of these years, I'll buy a new phone.
foursquare is clearly aimed at people with better phones. You have to type the venue name exactly, there is no fuzzy matching. If your checkin is not recognized, there is no way to correct it after the fact on the foursquare website. This can be very frustrating. Fred Wilson wrote about the importance of including SMS support in mobile apps, both to allow someone to try the service without having to install an app and to have an answer for the entire market. Certainly in my case, I wouldn't otherwise be able to use it.