There are basically three types of genuine image stabilisation; two are mechanical and one is electronic.
The oldest is optical image stabilisation, in which extremely accurate fast-moving actuators move one or more of the rear elements of the lens in response to camera vibration, which is measured by equally accurate movement sensors. This causes the position of the image on the sensor to move, cancelling out the movement caused by camera shake.
This type of image stabilisation is highly effective, and is used by both Canon and Panasonic in the lenses of their digital SLRs and many of their compact cameras, as well as in other optical products such as binoculars and telescopes. The disadvantage with this system is that since it is built into the lens, image stabilised SLR lenses are expensive to buy and are usually heavier than their non-stabilised counterparts.
The second type of mechanical stabilisation is the moving sensor, or CCD-shift, system. In this type of system, vibration is again detected by movement sensors, but this time tiny servos move the camera sensor up and down and from side to side, to counteract the movement of camera shake.
This was pioneered by Minolta in its Dimage A1 super-zoom compact in 2003, and has since been implemented by several other manufacturers, including Sony, Pentax, Olympus, Casio and Ricoh, in both compact cameras and digital SLRs. This system is also very effective, although opinions differ on whether it is more or less effective than optical stabilisation. For Sony, Olympus and Pentax SLR owners it has the advantage that because the image stabilisation is built into the camera body, lenses are usually cheaper and lighter.
The third type of real anti-shake system is electronic image stabilisation. This much less common in still cameras, but is used extensively in video cameras. In this type of system, camera shake is usually detected electronically by the image processor, and the recorded image is moved digitally to counteract camera shake. It is slower than the mechanical systems, causing shutter lag and long processing times, and can also have a negative impact on overall image quality. It is also not as effective as the mechanical systems. However since it has no moving parts it adds little to the weight of the camera.
The effectiveness of mechanical image stabilisation systems varies from one manufacturer to another, but all of them have improved over the years, and most systems now offer at least three stops of extra low-speed stability, so for example a shot that would have needed a shutter speed of 1/250th of a second to ensure shake-free results can instead be taken at 1/30th of a second with no problems.