The Life of a Transaction
What exactly happens when you tap two NFC-enabled devices together? It's easier to understand with a concrete example, so let's assume you're walking down the street when you see a poster for an upcoming performance by Man or Astro-man? Because you dig surf rock, you want to check it out. You also see some text on the poster that says it has an NFC tag.
You quickly whip out your smartphone and activate an NFC-reading app. Activating the app sends a signal to the NFC chip inside your phone. Electricity flows through the circuitry of the chip, generating a weak magnetic field. This means your smartphone is an active NFC device -- it's using power to generate a magnetic field. You hold your phone up to the appropriate spot on the poster.
At this point, the weak magnetic field generated by your phone induces a magnetic field in the NFC tag within the poster. The magnetic field induces electricity in the NFC tag, which doesn't have its own power supply -- it's a passive NFC tag. This creates a radio field. The radio field generated by the tag interacts with the field generated by your phone. The NFC chip in your phone detects and decodes the radio field. The information turns out to be a link to a video of the band playing live. The app gives you the option of visiting the link directly if you wish.
Some NFC transactions will involve two powered devices. You may want to exchange some contact information from your phone with another person's phone. In an exchange, both devices act as active and passive components -- when active, a device sends information and when passive, it accepts information. It takes just a moment for the two phones to send information to each other. Before you know it, your contact information is in the other person's phone and vice versa.
An active NFC device can only communicate with one target device at a time -- you can't broadcast a message to multiple devices over NFC. The active device will send information to the target and will only accept a response from that target. Other NFC devices will ignore the communication.
It's important to remember that NFC just covers the actual transmission technology. It doesn't determine the content of those transmissions. The various hardware and apps that incorporate NFC chips will dictate what information changes digital hands. While the transmission technology is standardized, the content that can move across it isn't.