Dividing can be a rather involved process, depending on what you need to do. As a result, it is a subject that may be a bit too involved for an in depth write up in this forum. There are two books about it that I can recommend, as I have both of them.
The first, and easiest to understand was written by Dave Gingery. The book is about various accessories that you can make for your shop, including a dividing head. In addition to plans and instructions for building your own, he includes excellent instructions on how to use it, especially for direct and indirect indexing (the most common kinds). It is available from Gingery Publishing, run by Dave's son, Vince, for (currently) $9.95
http://www.gingerybookstore.com/
The second book, which is also very good, goes into greater depth but is definitely written in a more technical manner. It is called Milling-Machine Indexing, written by Felker and Paine. It is very good also, and is available from a couple of sources. It is a great resource if you plan to get into differential indexing or something more in depth like that. It was written in 1942, but the information is still entirely current. It is available from a number of different sources. Do a search for
book "milling-machine indexing" and Google or Yahoo will find several sources for you.
There is yet a third book available on the subject that I just stumbled on. I have not seen it myself, but it might be worth looking into. It is called Milling-Machine Indexing and Spiral Work by Ray E. Gifford, published in 1957. Reprints are currently available on eBay for $14.50 plus shipping.