I know I should lubricate my chain regularly. I got some lube at my LBS; how should I apply it? Do I just drip some on one spot, and turn the pedals around a few times to spread it out? Drip it all over the chain? Do I clean the chain first? How can I tell if it needs lube, or if I've put enough on?
When should I lubricate the chain?
This depends a bit upon the chain lubricant that your using, how often you ride the bike, how you store the bike and what sort of weather you are riding in. As a general rule of thumb I'd think about lubricating the chain every 100km to 200km.
If your chain is visibly dirty, rusty or squeaking when you ride, then you definitely need to lubricate the chain.
Do I need to clean the chain first?
If it is dirty, yes, otherwise no. If you are in the habit of regularly lubricating your chain, then you don't need to clean the chain each time you lubricate it. If you leave it a long time between lubrication, then its probably worth cleaning it every time.
How do I apply the lubricant?
Pretty much exactly as in Gary.Ray's answer. Start at a spot on the chain you can recognise (e.g. the master link), rotate the chain slowly backwards and put a drop or two on each roller until you get back to your starting link. Finally, give the chain a good few cranks around to make sure the lubricant has penetrated appropriately and wipe any excess off.
If you are feeling lazy, and don't mind getting lubricant on the ground, then you can just direct a thin stream of the lubricant onto the chain as you pedal it backwards a bit. It's more wasteful of lubricant, but faster.
If the chain has a master link I like to start there just so I can keep track of which links I have lubed easier.
Usually you should shake up the lube, especially if it is a 'dry' or 'wax' formula. Then drip 1 or 2 drops on the rollers of each link. Lube on the outside of the chain is basically worthless unless you are applying a 'wet' lube for weather protection. More than one or two drops on each link will be too much, and will drip a lot of lube onto the floor or ground where you are working.
Pedal the chain backwards and get every link. When done run the chain through all the gears. Let the chain sit for a few minutes then using a clean, dry, lint-free cloth, wipe the excess from the chain, cogs and chain rings.