Essentially you can burn two types of alcohol for cooking. Solid and liquid. Solid alcohol is best known as Esbits tablets. Esbits tablets are usually used with a holder or wing stove, and you simply light the tablet on fire and heat up your cookware. Sterno cans is another form of solid alcohol usually used in chaffing dishes at buffets.
Burning liquid alcohol is a little more complicated. I suppose you can simply pour a bit of alcohol in a small pan and light it on fire, however this does not burn efficiently. If you remember your high school chemistry: solids do not burn. And in fact liquids do not burn either. Only gas vapors burn. Liquid and solid alcohol must first go through a phase change or two before it going into its flammable vapor state. Holding a flame to an Esbit tablet first liquefies some of the alcohol then vaporizes it. Liquid alcohol evaporates into gas form and readily catches on fire. Simply burning the evaporated vapors do not provide enough heat for cooking purpose. In order to provide enough fire power, one must first pre heat the liquid alcohol and provide a large amount of alcohol vapor. To do this a stove must have vapor generating chamber.
The basic design of a beer can stove is to use the bottom portion of two cans. Cut the center out of one can, and slip a ring of aluminum can material in between as you nestle the two halves together. The ring should have several holes punched out of the bottom to allow the alcohol to flow from the inner chamber to the vapor generating outer chamber. Many small holes are then punched in the top portion of the outer chamber to allow the pre heated vapor to escape, and combust. So there you have it, a camp stove that cost almost nothing to make.
Beer can stoves have been around for a long time. There are even a few commercially produced versions; Trango for example makes one. So why have you not heard of them. Well these stoves require a bit of tinkering and are not good for anything more than boiling water. There isn't much money to be made from manufacturing them either. For the camping masses this is not the stove of choice. They have limited power and will have trouble melting snow for drinking water, and generally do not simmer. However these stoves have quite a cult following amongst the ultra light gear geek crowd. A quick goggle search will yield many sites documenting the finer details of beer can stove construction.
Having spent many nights consuming various beers to find the perfect combination of cans, and punch holes in cans, I finally gave up. A beer can stove seemed to be more of a hobby than an actual piece of outdoor gear. I could never give up packing my ol trusty MSR Whisper light, and I usually cook meals which require a little more than boiled water.
Recently my interest in beer can stoves were peeked again. Within the depths of advrider.com is a vendor section where people sell all kinds of things, including their home grown products. A particular Shady Rascal produces and sells his own version of a beer can stove. http://www.advrider.com/forums/showthread.php?t=431851 Instead of using a beer can he uses aluminum beer bottles. He also rivets the two halves together. This solved three of my primary issues with the beer can stove. Durability: crushing the stove in my pack (1), and the two halves coming part (2), and having to tinker with a poorly built prototype (3). For $7 and $2 shipping and handling, you can get one of these built stoves (or you can make it yourself). I bought two.
Though I have not extensively field tested this product, initial back yard test results are promising. Who knows, maybe one day you will find me atop some mountain cooking my top ramen with a beer can stove!