I lived in Chile for two years, and was introduced to maté there. In Latin America (esp. Argentina, Uruguay, southern Brazil, and Chile) maté is a social drink, shared between a group of people who drink from the same straw.
It is drunk using a gourd—which can actually be made of metal, ceramics, wood or an actual, dried gourd—and a metal straw called the bombilla. The dry herb is placed in the gourd and hot water, usually from a thermos, is poured regularly into it. In other words, the gourd is the tea bag and the straw acts as the filter, keeping the herb from being sucked in.
There are a lot of opinions on how to best prepare maté. Here is a video, produced by someone else, explaining how I do it: http://www.youtube.com/watch?v=kTH1Ilbs3CM.
Rosamonte is perhaps the most typical and popular brand in Argentina. It is also one of the strongest.