Robert Wilde explains on About.com that a monarchy works by investing complete sovereignty in one person, called the monarch, who is the head of state. A monarch holds this position until death or abdication.
Wilde states that monarchs typically hold and attain their position through the right of hereditary succession, which means the position is passed on by the monarch to a relative, such as a son or daughter. Another type of monarchy is elective monarchy, wherein the monarch holds the position upon election. Male monarchs are generally called kings, and female monarchs are known as queens.
Monarchs have varied amounts of power, depending on the time and situation. In absolute monarchies during the early modern period, the monarch held full power over everything. In constitutional monarchies, the monarch serves as a figurehead, and most of the power resides with other forms of government. Monarchies were dominant in European countries from the end of the Roman era until the 18th century.
In the United Kingdom, monarchy is the oldest form of government, and it is currently a constitutional monarchy. Thus, the ability to create and pass legislation rests with an elected parliament, although the sovereign is the head of state and signs laws into effect.