Ludum Dare is two separate but similar events held every four months: the competition and the jam. The competition is a 48 hour challenge for a single developer to create a game on a given theme, using only assets created over that two day period. The jam is a 72 hour challenge that allows teams to create a game on the same theme, with far more relaxed rules on assets and code.
Once the games are complete, voting begins. Any person or team who submitted a game may vote based on a number of categories, including innovation and fun. After three weeks judging ends and the highest scoring games within each category are announced.
Given the visibility of your game to potential judges is based on how many games you yourself have rated, and the fact that there are no tangible prizes, Ludum Dare is more a creative and social exercise than it is a competition. Many well known developers take part in it, as well as hundreds of smaller ones, and a significant number of well known games have come out of it, including McPixel and Evoland.