Oil filters keep small bits of material which could damage the engine from recirculating through the engine's oil passages. They are usually found at the bottom of the engine, and near the oil pump and/or cooler.
How Oil Filters Are Made
Canister-type oil filters (as seen in the video above and picture at the right) are put together by inserting a filter element into a metal cup, sealed with a metal cap which has the threaded portion to screw on to the engine. The filter element within often sits on a spring if an anti-drain-back valve is included.
Cartridge filters are just the filter element sometimes combined with fitting pieces.