The regulation is pretty cool:

Cancellation within 14 days, and not being rerouted successfully (leaves before 2 hours of original schedule and arrives 4 hours after schedule) or cancellation within 7 days, and not being rerouted successfully (leaves before 1 hour of original schedule and arrives 2 hours after schedule). They will not be obliged to compensate if the cancellation is caused by extraordinary measures.

Denied boarding: Volunteers are entitled to have their tickets reimbursed + compensation as agreed to by the carrier and the passenger.

Compensation for non-volunteers and cancellations outside of the window and not due to extraordinary circumstations above are entitled to the following:

250Eur for flights within 1500km (125 if the passenger is rebooked for a flight that arrives within 3 hours)
400Eur for flights wihin EU and all other flights between 1500-3500km (200 if the passenger is rebooked for a flight that arrives within 3 hours)
600Eur for all other flights (300 if the pax is rebooked for a flight that arrives within 4 hours).

Delay:
2+ hours for flights within 1500km
3+ hours for flights wihin EU and all other flights between 1500-3500km
4+ hours for all other flights,

passengers get:
meals and refreshments
2 telephone calls, telexes, fax messages, or emails.

If the flight will leave the next day,
hotel accomodations + transport to/from the hotel.

When the delay is over 5 hours, the carrier will get the choice to have their ticket reimbursed (including the parts of the flight already made if the flight had no purpose).

A few keys:

The regulation does not apply to free travel or for rates not offerred to the public (sorry travel agents), but does apply to REWARD tickets.

If you are in J and are downgraded, you are entitled to a refund of up to 75% of the ticket price depending on distance travelled.

YOU ARE NOT entitled to financial compensation for delays or for cancellations due to extraordinary circumstances (including weather, strikes, political strife, etc).

The airlines DO have to take care of you (food, calls, hotel and transfers) for ALL delays including extraordinary circumstances. ^

The regulation applies to all EU airlines no matter the departure point and all non-EU airlines departing from an EU port.