Inflammation is a process that the body undergoes to deal with tissue damage (by any mechanism) and to eradicate infection or cancer. There are other situations where inflammation occurs to cause tissue damage, rather than the other way around, so understanding inflammation is the key to understanding many disease processes.
The process of inflammation leads to four changes in the affected tissue.
Redness. Blood vessels dilate to allow white blood cells and certain chemicals to reach the affected tissue preferentially to surrounding tissue.
Heat. The affected tissue is also hot, due to the dilatation of the blood vessels.
Pain. Chemicals produced by the body activate pain fibres and force the person to attend to the inflamed body part (i.e. remove the splinter or stop walking on the gangrenous foot).
Loss of function. Bowel when inflamed can ulcerate and bleed or cause diarrhoea. The exact consequence of loss of function, depends on what tissue is inflamed.
One thing a doctor will take great pains to work out, is whether inflammation is just affecting an isolated part of the body, or if it is involving the circulating immune system (blood, bone marrow, liver, spleen and lymph nodes). Blood tests are often very helpful in this regards and will enable a more refined diagnosis to be made.
Any tissue damage will lead to a certain amount of inflammation, but often the cause of tissue damage dictates what type of inflammation is seen (it does vary in severity and form).
Trauma, particularly burns.
Allergy (often this is discussed in terms of hypersensitivity reactions, where the inflammatory reaction seems disproportionate and leads to tissue damage.
Autoimmune reaction. A body protein becomes recognised by that individual's own immune system and attacks the organ that contains that protein (i.e. insulin dependant diabetes).
Inflammation may be a consequence, but also a cause of a disease (often it is both). What happens next is dependent on where and how aggressive the immune response is. The conditions that arise out of chronic inflammation, are often persistent stimulation derived (i.e. autoimmune), or failure to switch off (i.e. IBD).