how exactly does it work ?
The #bitcoin-otc marketplace is an unstructured marketplace where various offers to buy and sell can be listed. There isn't even a requirement that the trade involve bitcoins so there have even been trades like Steam subscriptions traded for Amazon gift cards, for instance.
Here's a view of the open buy and sell orders:
To help prevent against fraud, there is a reputation system called the #bitcoin-otc Web of Trust (WoT). Here's the list of the 1,500+ users:
All actions for the marketplace occur through IRC. The "front door" is the #bitcoin-otc-foyer IRC channel:
But to access the marketplace you'll want to use a GPG key, register it with the -otc marketplace, and then hang out in the #bitcoin-otc channel:
There is a bit of a learning curve if you aren't already familiar with GPG.
Here's a video tutorial on using the #bitcoin-otc WoT:
Here's a wiki page for the marketplace: