The word "altar" comes from a Latin term meaning "high place," indicating its connection to the Divine. It is a place of worship, as well as a place of power and magick, but it is not sacrosanct. Craft practitioners do not believe that the God and Goddess actually inhabit the altar itself or, for that matter, that they inhabit the images or objects placed on the altar to represent them. The altar is rather a shrine or tribute to them and to the elements of Nature.
Most practitioners usually set up and dismantle their altar for each magickal ritual, probably due to the lingering fear (whether conscious or subconscious) of discovery and persecution which has existed for centuries. People have always feared what they do not understand. Even in this enlightened age, there are still those otherwise responsible, intelligent people who would rather see us dead than practicing our religion. They are few, but they do exist and, even today, Craft practitioners are exposed to psychological harassment and sometimes even physical violence at the hands of those who misunderstand the religion.
However, some practitioners do leave permanent altars set up in their homes. The decision is an individual one that only you can make for yourself, and either way is perfectly acceptable.
The altar, bearing the ritual tools, stands in the center of the circle. Most practitioners position the altar so that it faces North, as North is a direction of power and is associated with the Earth. But some practitioners place their altars facing East, where the Sun and Moon rise. Again, this is completely up to you. Both directions are acceptable.
The altar is traditionally made of Oak or Willow wood, or sometimes even stone, due to their inherent power and connection to Nature and the Divine. But it can also be nothing more than an area on the ground, a cardboard box covered with cloth, two cinder blocks with a board lying on top, a coffee table, an old sawed-off tree stump in the wild, or a large flat rock. I personally use the top of my solid Oak coffee table or sometimes, for portability, my Mexican marble chess board as an altar.
The left half of the altar is usually dedicated to the Goddess (represented by either an image of the Goddess or by a green, silver or white candle), while the right half is dedicated to the God (represented by either an image of the God or by a red, yellow or gold candle).
In the center, flowers appropriate to the occasion may be placed in a vase or small cauldron. Also, the censor (or incense burner) is often placed in the center of the altar so that the smoke from the incense is offered up to both aspects of the Divine. The pentacle, if used on the altar, is usually placed in front of the censor.
Some practitioners (myself included) prefer a more primitive, Nature-oriented altar plan. In this case, the Goddess is represented by a round stone (pierced with a hole if available), a corn dolly or a seashell. The God is then represented by a pine cone, tapered stone or an acorn. Feel free to use your imagination in setting up this type of altar. In fact, all altars are personal constructions and should, first and foremost, be pleasing to you.
If you will be working magick in the circle, all necessary items should be placed either on the altar or beneath it before you cast the circle. If you will be burning candles on the altar during the ritual, never forget to include matches and a small bowl to hold the used matches. It is considered impolite to throw them into the censor or cauldron.
During outdoor rituals, an altar isn't necessary and can in fact be rather awkward (not to mention attention-getting) to set up outdoors. Often a fire in the center of the circle is substituted instead. In this case, the tools used for the ritual are the powers of the mind.