A fire is built in the bottom, which heats both the walls of the oven and the air inside to upwards of 900° Fahrenheit! Before cooking, the fire is allowed to die down to coals so that the temperature remains consistent while food is cooked.
Flatbreads like naan get slapped against the sides of the oven (as in the image above). They adhere to the super-heated surface, cook very quickly, and are peeled off when they're done. Meats are usually cooked on long skewers that are either inserted directly into the oven or cooked over the mouth of the oven.
One of the biggest advantages of these ovens is that once they are heated, they will maintain a consistent high temperature for hours with very little additional fuel. This is a big plus in parts of the world where fuel is scarce.
Nothing really compares to cooking in a real tandoor oven, but if you aren't lucky enough to have one in your kitchen, there are some ways you can come close. For bread baking, you can line an oven rack with a pizza stone or unglazed quarry tiles. Heat the stone along with the oven to as high as the oven will safely go, and then bake directly on top of the stone. For meats and other dishes, we think cooking over a charcoal grill is the closest cousin.
Do you have any experience cooking in a tandoor oven?