For voters, ranked choice voting is literally as easy as 1, 2, 3. Just rank your choices in order of preference. This sample ballot shows a voter who preferred Alice first, Carol second, and Bob third.
Counting Single-Winner Races
RCV ballots are counted in a series of rounds, as shown in the following flowchart and video. First, all the first choices are counted, and if any candidate has a majority (more than half) the votes, that candidate wins. Otherwise, the last place candidate (with the fewest number of votes) is continually eliminated until a candidate reaches a majority.
Counting Multi-Winner Races
The single-winner race tabulation deals with the wasted vote "spoiler effect" problem by allowing ballots to count toward back-up choices when their first choice is defeated. In multi-winner races, it also handles a second, complimentary wasted vote problem: the "shoe-in effect." The shoe-in effect is the concern that a candidate will have too many votes — more than needed to win — and may take votes away from other deserving candidates. The RCV count deals with wasted votes for shoe-in candidates by transferring ballots, or fractions of ballots, from elected candidates to back-up choices that have yet to be either elected or defeated. The following video illustrates the process.
For further reading, FairVote offers another multi-winner RCV example.