A microchip is a transponder or RFID (Radio Frequency Identification Device). It is a tiny chip with a unique identification number programmed into it and enclosed in a cylinder of biologically compatible material. Once the chip is injected under the skin of the pet, the unique number can identify your pet throughout their life once registered on an approved Database such as Animark. The chip cannot be lost or easily removed (link to below q’s) and hence provides a secure method for protecting your pet against theft.
Most positively YES. Its simple, painless, cheap (once in a lifetime), it may soon be a legal requirement BUT remember there is no point in having your pet microchipped unless it's also registered on an up to date web based database.
Yes. All microchips move to some extent. It's the fat layer under the skin that grabs the microchip and stops it moving. This is helped by either a special coating or rough collar on the microchip. It is therefore logical that in young puppies with very little subcutaneous fat that microchips could move further than expected. This is why it's important in puppies to implant the microchip midline between the shoulder blades where there is a "pocket" to hold the microchip until the fat can grab it.