== The Armature Object ==
Armature Object is like any other object type:
It has a center, a position, a rotation and a scale factor.
It can be edited.
It can be linked to other scenes, and the same armature data can be reused on multiple objects.
All animation you do in object mode is only working on the object, not the armature's contents like bones.
Try it now: add an armature to your scene: SPACEKEY --> Add --> Armature.
Or you can press the Shift + A keys, and select single bone from the armature menu.
When you add a new armature, you'll enter editmode automatically. To switch between modes, use the TABKEY or the dropdown menu in the Header of the 3Dview window (This might not be the case with blender 2.49b, you won't enter edit mode in that version):
== The Edit Panel When in Object Mode ==
This is how the edit panel looks after you have added a new armature and switched to object mode (TABKEY):
Link and Materials panel:
The AR: field let you rename your armature Datablock. The dropdown is a quick way to select which Armature datablock you want to connect to this armature. You can keep more than one version for the same character. Useful when you have a special move to achieve in a shot, you can turn on an armature for a special purpose.
The F button is an option to assign a Fake user to the Armature. Again if you have more than one armature for your character, it's a good idea to turn the Fake on, because if your armature datablock is not used (linked) it's not going to be saved in your .blend files. You can always do batch Fake-assignment of armatures by opening the Datablock browser (SHIFT-F4KEY), go in Armature datablock, select all the armatures you want to keep, and Press the FKEY.
The OB: field is just to Rename your armature Object to something more cool and useful than Armature... Armature.001...Armature panel:
X-Axis Mirror Edit: Not really useful now, it's more of an editmode option. This feature tells Blender you want to replicate all of your bones on one part of the Armature to the other. It's a clean way to just do half the job ;). The axis of mirroring is X so left<-->right in frontview (NUMPAD_1KEY) and the center is the center of the armature object. We will see this feature in detail in the next page.
X-Ray: This option will let you see the armature through anything in the scene, solid or not. It's useful to see where your bones are in your character so you can select them.
Automatic IK is a Posemode option. It lets you pose a chain of bones as if the bone you were holding was an ik target. More info in Posemode page.
Display Options: These options give you the chance to visualise your bones in various ways. Also note that there is some specific options and features regarding the display mode you're in.
Octahedron: This is the default view. Nothing exciting except you have a good idea of the rolling of the bones.
Stick: This display mode is really useful when you have a lot of bones in your view. It lets you "unclutter" the screen a bit. It draws the bones as tiny sticks.
B-Bones: It's more a feature than a display mode. This is only useful to visualise the effect you get when you activate the B-bones (Bézier-Bones). Each bone acts like a curve handle and lets you get extremely curvy poses. This will be exposed in the following pages.
Envelope: Again it's more a feature than a display mode. But in this case the visualisation will be useful to tweak your rig later. Envelope lets you easily tell which part of your character this bone will animate and it's visually possible to change the zone of influence exclusively in this display mode. The zone is only visible in Editmode or Posemode though.
Draw Axes: To draw the axes on each bone of the armature when you are in Editmode or Posemode. Useful when you want to know where you are and which axis to use in a constraint for example. Mental note: Y is up, Z is depth and X is side, contrary to object for which Z is up, Y is depth and X is side.
Draw names: This lets you see names of bones whatever the mode you are in. It's useful again to edit your armature, create parent dependencies or add constraints.
Ghost: This option lets you see a ghost of the armature in frames behind and over the current time. This is only working when you have an action linked to the armature, as we will see later.
Step: This option lets you choose the frames interval between ghost instances.
Vertex Groups & Envelope: These two toggles let you choose if you want the armature to deform your character using the Vertex Groups and/or the Envelopes. We will see that later.
Rest position: This will bring the character back to factory default (item as Editmode), and no actions will be applied to the armature so you can easily edit it in the middle of an animation.
Delay Deform: This was useful before as the old system was very slow. What it does is when you do a manipulation to the rig, it waits until you finish to update the view. Can still be useful though.
== Extra Practice ==
This YouTube tutorial might also help: Link
The short tutorial might be a help Link 2