The game is played on four grids, two for each player. The grids are typically square – usually 10 × 10 – and the individual squares in the grid are identified by letter and number. On one grid the player arranges ships and records the shots by the opponent. On the other grid the player records his own shots. Before play begins, each player arranges a number of ships secretly on the grid for that player. Each ship occupies a number of consecutive squares on the grid, arranged either horizontally or vertically. The number of squares for each ship is determined by the type of the ship. The ships cannot overlap (i.e., only one ship can occupy any given square in the grid). The types and numbers of ships allowed are the same for each player. These may vary depending on the rules.
(via Wikipedia