Let's start with an explanation of the most basic way that an Oyster Card works (ignoring travel cards & student discounts for the moment):
An Oyster Card is basically a pre-paid card which allows you to travel far cheaper than buying tickets as you travel. A passenger can go to a ticket counter, pay £3 deposit to get the card, and then charge it up with as much credit as they like. Whenever they go through the barriers on the Underground, or board a bus, they touch the card onto the pad alongside the entrance. If they make a bus journey, £1 will deducted from the available credit on the card (instead of £2, which is the cash fare). The price for a Tube journey varies depending upon how many zones are crossed but, for example, a journey entirely within Zone 1 would result in £1.60 credit being deducted from the card (rather than £4, which is the cash fare).
Further, the total amount that will be deducted from a card is capped daily. The passenger could make as many bus journeys as he liked in a day but there would never be more than £3.30 deducted from his credit. If he also made Tube journeys (or only made them) the total deduction would also be capped, based upon how many zones he'd travelled in, and whether he travelled during the morning peak period. For example, a tourist travelling off-peak wholly within Zone 1 would never have more than £5.10 deducted from the card in a day, even if he made dozens of bus and Tube journeys.
To top up the credit on a card, the passenger could either go to a ticket desk or pay at machine. Additionally, it's possible to link the card to a bank account, so that it's automatically topped up whenever its value drops below a certain level.
OK, that how an Oyster card works at the most basic level. (i.e. it simply 'carries cash' to purchase travel with, and functions as a ticket for such travel). However regular travellers (e.g. c