If sugar is heated to about 330-350°F (165-180°C), it becomes a golden brown liquid with a bewitching bittersweet taste. You may have had it on the bottom of creme caramel, or on the top of crème brûlée, or on the bottom (later top) of caramelized upside-down cake. It has lots of other uses as well; go crazy with this wonderful stuff! But first, here's how you make it:
You can simply put white sugar in the bottom of a clean pan and heat it, but adding water to the sugar from the start will help it melt more evenly. You just need enough water to dissolve the sugar; perhaps 1:2 or 1:3 proportions of water to sugar should suffice. Place the sugar-water mixture over high heat and begin to stir as the mixture heats. Completely dissolve the sugar in the water before it boils, and once it begins to boil, don't stir the mixture, or it will begin to crystallize. It takes about 7-10 minutes for the sugar-water mixture to begin to caramelize, but be sure to watch it carefully, for once it begins to darken it will cook very quickly. (Be careful, though, for it can burn; if you cook it too long you will have an unpalatable black bitter mess.) Unless you have a pan with no hot spots, you will need to shake the pan as the sugar is turning brown to ensure an even colour, but remember, don't stir it. Remove caramelized sugar from the heat when it's still a little lighter than you'd like, as it will continue to cook with the heat of the pan. You can always put it back on the heat if it's not quite dark enough, and note too that caramelized sugar which has hardened in a pan can be slowly reheated to liquify once more.
Fresh caramelized sugar is very hot, so handle it carefully. If you're adding liquids to it - say, whipping cream to make a luscious caramel sauce - do it slowly, and be prepared for lots of spluttering and bubbling. If pouring the caramelized sugar onto a surface - say, a cookie sheet - make sure the surface is well oiled so the the caramelized sugar won't stick. Caramelized sugar drizzled into a criss-cross pattern and allowed to harden makes a nice decoration for a fancy ice cream; or you can pour it into a puddle, let it partially harden, and then lift it off with an oiled spatula and drape it over a custard cup till fully cool; it will form a bowl in which you can serve dessert.
You might think the caramelized sugar you have created is melded to the bottom of your pan till the end of time, but if you add water to the pan and bring it to the boil, it will dissolve. | 
