Let's imagine a simple DJ setup: there are two turntables and in between them there's a mixer.
The DJ can play a different song on each of the turntables, and uses the mixer to 'mix' them together. He can select from 0-100 how much of each turntable you hear.
Mixers often have options like altering low, mid and high frequencies per turntable. These are the knobs you often see them playing with. Hear a song playing without bass all of a sudden? The DJ turned the low frequencies down!
There's a lot more to it, but this is the basis!
Everyone is chatting about EQing, but very few have mentioned beat-matching. This is the act of forcing two independent tracks (songs) to match beats so that when you use the crossfader (volume balance between two inputs - the independent tracks) to shift between the two songs, you don't hear a break in the beat. They blend the end of one track and the beginning of another together to make a contiguous "set" (a group of tracks beat matched together).
Then there is scratching.....
The main technical job of a DJ is keeping the music constantly going so there's no silence between songs where people would stop dancing. With electronic music, which is my specialty, this is done by subtly blending songs together as they play. When 1 song is playing, you use your headphones to queue up another song on the other table, and use a pitch control slider on the turntable to match it to the same speed (BPM: beats per minute) as the one that's already playing. Once they're the same speed, you can use sliders on your mixer to start your blend, so both songs are playing simultaneously on the speakers. You also use the Equalizer knobs on the mixer to selectively add/remove song parts during your blend to make it sound more fluid. It's generally not good, for example, to have the bass on both songs playing at full volume at the same time, since it will overload the mix with bass. You do this gradual blend over the course of a minute or so (depending on your style of mixing), and eventually you will have completely faded out the previously playing song, and everyone is now just hearing the new one, without any break in the music. Then you do it all again.
You used to have to do this all by ear, but now you have various readouts on a computer or CD player to assist with matching your song speeds more quickly and accurately, as a main challenge is being able to do all this quickly before you run out of time on the song that's playing. These devices also let you do things like loop parts of your songs in real time, to give you different blending options.
Now having said all that, a DJ's REAL job is basically being a music curator, in the same way that an art gallery curator is. 90% of a DJ's work is done outside of a club/party. They're researching music, building a collection, practicing to see what songs work together and what doesn't. I've been a DJ for 15+ years and a main thing I've learned is that when you're DJing, you can make a number of technical mistakes and mess up a mix or 2 and people generally don't care (if they even notice) as long as you're playing great tracks. On the other hand, you can be the tightest, most perfect blender in the world, but if your music taste sucks you will be seen as a joke (kinda like when Paris Hilton became a DJ).
Think of the simplest set up, a single turn table, connected to a equalizer and amplifier for volume control plus a box of records. A DJ playing on this set up would play one song, including the introduction and ending of the song, pull the record off and replace it and play the next song beginning to end.
It works but breaks the flow of the music, especially on a dance floor. So to make a seamless transition between two songs our DJ needs 2 turntables. One to keep playing the current song and a second to cue the next song. When they cue the song they can cut off the intro and get straight to the main part of the song.
To transition between the two turn tables they need a mixer in the middle to select which turntable's output they hear and which the audience can hear. Plus adjust the highs, mids and lows so the music sounds in the same range as the other songs they've played.
From there it's mostly artistic work to do fancy stuff like scratching, adjusting the speed of the song to try and beat match, etc.
Its called E Q-ing, (Equalizer) but most Deejays don't really do it for that reason, they want to look busy, real Djing where they push buttons, create sounds and effects is from touching the record in combination with the mixer fader to make sounds known as scratching, trick mixing, and beat juggling is called 'Turntablism' and not just blending beats from one record to another/blending, and yes they have mixers that have programmed sounds too, like a horn or a beat, chime, bell, et cetera.
I'd recommend going on YouTube and checking out some Boiler Room or Mixmag DJ sets. You can see high-quality DJs doing their thing in HD. You'll notice that most are using other equipment besides the usual two CDJs and a mixer. Some house/techno/dnb artists will utilize keyboards and MIDI pads during DJ sets for a much wider range of sounds and effects.
Edit: also strongly recommend checking out a set IRL if you live near any good venues. I saw Tycho do a set at a club in Brooklyn last Friday- he was decent, was kinda bummed to see a laptop involved but hearing Open Eye Signal by Jon Hopkins on a world-class analog sound system was a treat. Saw Four Tet do an absolutely fire vinyl set at the same club a few months prior.
Edit 2: if you see someone with a turntable emulator on their MacBook repeatedly smashing the air horn effect, that is not a good DJ.
Alot of people are telling you about what a skilled DJ at the top of their craft should do ideally. I dated a DJ for awhile and got the "behind the scenes" of alot of mid-level DJs. At your local bar or club, I'd say 80% of the time, they don't live up to that expectation.
Most DJs now use digital tables or "CDJs" instead of vinyl... Beat-matching is done at the push of a button, most DJs don't scratch but have pre-recorded scratching samples mapped to buttons, songs can be edited days in advance on your PC and even the cross-fading can be done ahead of time to make 1 seamless audio file out of a large set.
I witnessed a fistfight between 2 DJs when thumb-drives got swapped and the set that JUST finished playing started again as the first DJ walked away from the booth... Effects and all.
If the DJ has time to drink their beer or say "get hyped", they're probably faking it. If they have their eyes glued to the booth and are nodding or counting to themselves, they're probably the real deal.