From: Shua in Baltimore:

Dear Shua,

The mitzvah of mezuza is to write two paragraphs from the Torah: "Shema" (Deut. 6:4-8) and "V'haya" (ibid. 11:13-21), and affix them to the doorpost of all gates, houses and rooms. Among other things, these two paragraphs proclaim G-d's oneness, and command us to take the Torah's words to heart and teach them to our children. The mezuza must be rolled with the writing facing inward. A mezuza rolled the other way, with the writing exposed, is halachically unacceptable.

The three words at the bottom of the mezuza on the outer side of the parchment are "Cuzu Bmucsz Cuzu" an altered form of the phrase "Hashem Elokeynu Hashem", which means "G-d, our Lord, G-d". It is actually a form of Gematria (numerology) where each letter is "raised" to the next letter. Thus, an Alef becomes a Bet, and a Bet becomes Gimel, and so on. Here, the letters for G-d's name yud, hey and vav, hey become caf, vav, zayin, vav (cuzu); and the letters for Elokeynu (alef, lamed, heh, yud, nun, vav) become bet, mem, vav, caf, samach, zayin (bmucsz). Rabbi Moshe Isserlis quotes the Hagahot Maimoni as the source for this custom. It is only a custom and a mezuza without these words is still valid.

Maimonides mentions another custom that some people practiced. They wrote the names of angels or other holy names on the same side of the parchment as the two paragraphs of the Shema. He writes that these people "invalidate the mezuza and make a mockery of the mitzva". The Hagahot Maimoni quotes other Sages who permitted such additions. However, we generally follow the ruling of Rabbi Moshe Isserlis who rules in agreement with Maimonides and forbids these other additions.

An erroneous custom that evolved regarding the mezuza was to wear it as an amulet. One negative outcome of this practice is the desecration that occurs when, for instance, someone wears a mezuza in an unclean or impure place. Fortunately, nowadays what is often worn around the neck and called a mezuza isn't really one, but simply a decorative case like those used to cover real mezuzot.

However, placing a valid mezuza on the doorpost in fulfillment of the mitzva earns G-d's special protection over one's household. This idea is related by the Talmud in the following episode:

Onkelos, the brilliant nephew of the Roman Emperor Titus, converted to Judaism and became a disciple of the Sages. Hearing this, Titus sent a brigade of soldiers to bring him back to Rome. But when Onkelos engaged the soldiers in discussion and showed them the beauty of Torah, they converted to Judaism.

Titus then sent another brigade, instructing them not to speak to Onkelos. But after listening without even speaking, they too converted to Judaism. Finally Titus sent a third brigade and instructed them not even to listen to Onkelos. When they were leading him away, Onkelos placed his hand on the mezuza and inquisitively inquired, "What is that?"

"You tell us," the soldiers said. He replied, "Normally, a human king sits inside and his servants stand outside and guard him. But, the Holy One Blessed be He, His servants are inside and He guards them from outside." They too converted. Titus sent no more soldiers.

Sources:

• Rabbi Moshe Isserlis, Shulchan Aruch, Yoreh Deah 288:15
• Maimonides, Mishne Torah, "The Laws of Mezuza" 5:4
• Hagahot Maimoni, ibid
• Avodah Zara 11