Hi there,
I read the book at started using the method on my son when he was around 2 and a half I think. I can't remember what the minimum age to start using it is...
Anyway, at the time my son was really hard to handle - head banging, biting, tantrums etc and we were starting to get really stressed out. When we yelled at him (well, when my husband yelled at him...) he didn't respond at all, in fact he got worse, so... I started reading.
123 magic is pretty basic. The child is doing something 'wrong' you say 1, then give five seconds for them to mentally register and respond, if they don't say 2, give the thinking time again, if they don't stop then you say 3, then 5 more seconds and then you deliver a consequence. It can be time out or it can be a logical consequence like removing toys if they refuse to pack away or something like that. With time out, depending on age, you can either finish it by explaining why they were in time out, or if they are old enough they can explain to you why.
The two important things with the method is not getting angry, or at least not showing anger and frustration. The counting is meant to be a way to get the parents emotions under control. You should also always give the five seconds between counts as kids take a while for thoughts to enter their heads and then respond. If you count to fast you don't give them a chance to go "hmmm, mummy isn't happy... maybe I'll stop doing this...." and then stop.
That's the gist of it I think. Its been a couple years since I read it so hopefully I haven't miss represented anything. It worked really well for us and we still use it now when needed - usually when I feel like I'm going to loose my cool.
Funny thing happened last night though. My brother, who is 40+ years old, was over and he was doing something annoying and wouldn't stop. I was just on the verge of saying "that's one" - luckily I managed to stop my self from saying it out loud just in time.