Here is some more info David,
Iron will, at common temperatures, organize itself into an atomic structure that is called "body centered cubic." This consists of overlapping cubes with an atom at each corner, and one more in the center of the cube. But above roughly 1400 degrees F there is a change in structure to "face centered cubic" and the central atoms migrate to the faces of the cubes. This latter form is not magnetic.
Steel is basically iron with some carbon mixed in, though modern alloys have various other metals and substances as well. When steel is heated to the critical temperature (about 1400 degrees F), the iron will change to face centered, and the carbon atoms will migrate into the central position formerly occupied by an iron atom. This form of red-hot steel is called austentite. Since it is not magnetic, a magnet may be used to determine when the critical temperature has been reached (though the magnetism may be lost before the transition, so this is only approximate). Complete migration of the carbon atoms may take a minute or two.
If you let this cool slowly, the iron atoms migrate back into the cube and force the carbon back out, resulting in soft steel called pearlite. If the sample was formerly hard, this softening process is called annealing.
If you cool (quench) the sample suddenly by immersing it in oil or water, the carbon atoms are trapped, and the result is a very hard, brittle steel. Too brittle for most uses. The structure is now a body centered tetragonal form called martensite.
So, the next step is to heat it back up, to between 200 and 800 degrees F or so, depending on the desired end hardness. This allows some of the hardness to relieved and is called tempering. The amount of tempering that is desirable depends on the final use. Cutting tools are very hard, knife blades less so because they must flex under use rather than break. Tempering is a trade-off between hardness and flexibility.
Accurately measuring the tempering temperature is important. A nice, expensive thermostatically-controlled oven is great. Or, some special compounds can be applied that melt or change color at the right temp, such as Tempilstik and Tempilaq. If the steel is clean to start with, then you may notice that it goes through certain color changes as it heats up, with understandably vague descriptions such as "light straw" indicating about 440 degrees F, and purple=520. These colors are not incandescence colors, but are viewed in normal room light. The colors are due to types of surface oxidation that are temperature dependent.
When quenching, it is often very important to avoid stirring a part because this will cool one side much more quickly than the other, and might cause warping. For knife blades, as an example, move it strictly up and down during the quench.
Case hardening is a bit trickier, and involves heating the object in some sort of agent that promotes hardening at the surface. Liquid cyanide works well but should be out of the question for the home machinist. Luckily there are substitutes available from suppliers, one being called Kasenit, for example. Note that hardness is often measured using a "Rockwell C" scale, with 63 being very hard and 35 being fairly soft.
A type of steel called "drill rod" is especially useful for home/hobby use. As its name implies, it is the type of steel used for drills, and is available is round or square form (square drills?). Drill rod is also very useful around the shop because it is usually made to very accurate dimensions. Some types of drill rod are formulated for hardening via heating then quenching in oil, while others are quenched in water. The difference is that water will cool more quickly because it's a good conductor (though it may also form a steam "jacket" that moderates this effect), while oil will cool more slowly. Since rapid cooling may warp a part, this could make a difference in the final product.
There is also an "air hardening" steel, though it seems to be quite a bit more expensive than other steels.
Most of this is from info I gathered around the web so hopefully it answered your question and then some.
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