Activated Carbon Filters:
Activated carbon (AC) is particles of carbon that have been treated to increase their surface area and increase their ability to adsorb a wide range of contaminants - activated carbon is particularly good at adsorbing organic compounds.  You will find two basic kinds of carbon filters Granular Activated Carbon (GAC) and Solid Block Activated Carbon (SBAC). 

Contaminant reduction in AC filters takes place by two processes, physical removal of contaminant particles, blocking any that are too large to pass through the pores (obviously, filters with smaller pores are more effective), and a process called adsorption by which a variety of dissolved contaminants are attracted to and held (adsorbed) on the surface of the carbon particles. The characteristics of the carbon material (particle and pore size, surface area, surface chemistry, density, and hardness) influence the efficiency of adsorption. 

AC is a highly porous material; therefore, it has an extremely high surface area for contaminant adsorption. One reference mentions "The equivalent surface area of 1 pound of AC ranges from 60 to 150 acres (over 3 football fields)".  Another article states, "Under a scanning electron microscope the activated carbon looks like a porous bath sponge.  This high concentration of pores within a relatively small volume produces a material with a phenomenal surface area: one tea spoon of activated carbon would exhibit a surface area equivalent to that of a football field." (estimates of surface area vary from different sources - RJ)

AC is made of tiny clusters of carbon atoms stacked upon one another. The carbon source is a variety of materials, such as peanut shells, coconut husks, or coal. The raw carbon source is slowly heated in the absence of air to produce a high carbon material. The carbon is activated by passing oxidizing gases through the material at extremely high temperatures. The activation process produces the pores that result in such high adsorptive properties.  An article about Activated Carbon states that "Activated carbon is one of the best tools which can be used to reduce risks to human health and provide an aesthetically pleasing product at reasonable cost."  The article also describes how AC works and has some of the best scanning electron microscope pictures of actual AC granules I have seen. (The information came from The Via Department of Civil and Environmental Engineering (CEE) at Virginia Tech and is no longer available)

The adsorption process depends on the following factors: 1) physical properties of the AC, such as pore size distribution and surface area; 2) the chemical nature of the carbon source, or the amount of oxygen and hydrogen associated with it; 3) chemical composition and concentration of the contaminant; 4) the temperature and pH of the water; and 5) the flow rate or time exposure of water to AC.  Interesting article:  What is Activated Carbon, Adsorption, History of AC.

  The effectiveness of carbon filters to reduce contaminants 
     is affected by the factors affecting adsorption listed above
     and three additional characteristics of the filter, contact time
     between the water and the carbon material, the amount of
     carbon in the filter, and pore size.
      The length of contact time between the water and the
        carbon material, governed by the rate of water flow and the
        amount/volume of activated carbon, has a significant effect
        on adsorption of contaminants. More contact time results in
        greater adsorption. 
      The amount of carbon present in a cartridge or filter
        affects the amount and type of contaminant removed. Less
        carbon is required to remove taste- and odor-producing
        chemicals than to remove trihalomethanes. 
      Pore size characteristics will be discussed in greater detail
        on the GAC and SBAC pages, but GAC filters contain loose
        granules of activated carbon while in SBAC filters, the
        activated carbon is in the form of very small particles bound
        into a solid, matrix with very small pores.

  Because of the filter characteristics discussed above, the
     most effective Point of Use activated carbon filters are
     large SBAC filtration systems, and the least effective are
     the small, pour-through pitcher filters.

Activated carbon filter cartridges will, over time, become less
    effective at reducing contaminants as the pores clog with
    particles (slowing water flow) and the adsorptive surfaces in
    the pores become filled with contaminants (typically not
    affecting flow rate). There is often no noticeable
    indication that a carbon filter is no longer removing
    contaminants, so it is important to replace the cartridge
    according to the manufacturer's instructions.  The overall
    water quality (turbidity or presence of other contaminants)
    also affects the capacity of activated carbon to adsorb a
    specific contaminant.

It is important to note, particularly when using counter-top and
    faucet-mount carbon filtration systems, that hot water
    should NEVER be run through a carbon filter. I have
    seen warnings about possible damage to the filter from hot
    water. Perhaps more importantly, hot water will tend to
    release trapped contaminants into the water flow potentially
    making the water coming out of the filter more contaminated
    than the water going in.