Q So what is this CFW thing and how does it work?
A CFW basically means Custom Firmware and it enables you and your PS3 to do things it wasn't intended for.
Q Ok, I'm all hyped up for this, what are the pre-requisites?
A All you need is a PS3 running 3.55 (To check Settings>System Settings>System Information).
Q But I've heard something about an Infectus chip which can help me downgrade?
A The method exists, but is very complex and demanding. Newbies should absolutely avoid this method or find someone who can do it for them. The guide for this can be found at THIS PAGE. Also, this guide can be used to fix the PS3 Brick caused by Waninkoko's CFW.
Q) Which is the best CFW, 'cause I see a lot of names around here? (Geohot, Kmeaw, Waninkoko, etc.)
A) Excellent question. My personal recommendation is to install the kmeaw CFW, as there is absolutely no chance of bricking your console since it does not patch your lv2.
UPDATE:- If you want OtherOS++ Support along with some other perks such as the Package Manager by Team Rebug, I would recommend PS3A Revision 2 Custom Firmware
Q) What about Rebug CFW?
A) Though it enables many debug options in your PS3, it is not of much use to an average user and so I wouldn't prefer that.
Q) lv2? What's That?
A) I will not go into the specifics, all I will tell you is in order for you to play 'backups' you need a CFW that has peek/poke capability which is a pre-requisite for you to run a backup manager.
Q) Backup Manager?
A) The 'program' on your PS3 that loads the 'backups' for you to play.
Q) So... if lv2 is not patched, what am I supposed to do?
A) When the first CFW was released you needed to run a program called lv2patcher on PS3 startup to play, but now all backup managers incorporate auto-lv2 patching so you don't have to do anything. So, as long as you have the latest version of your favorite backup manager, you'll be fine.
Q) So, now how to install this CFW?
A) Ok, I will outline the basic steps and you'll be fine (NOTE:- IF YOU ARE ON 3.56 DO NOT EVEN DARE ATTEMPT THIS)
1) Download PS3 3.55 Kmeaw CFW from the Sticky thread.
2) If you're not already on official firmware 3.55, download it and install as you normally would.
3) Now put your CFW, after renaming it to PS3UPDAT.PUP in the following way,PS3/UPDATE/PS3UPDAT.PUP
4) At first, try installing it through XMB, System>Update>Through Storage Media.
5) If it shows no applicable update data found, install it through Recovery Mode.
6) Congratulations, you are on CFW now.
Q) Ok, now what?
A) Now just download a backup manager, I would recommend multiMAN.
Q) It shows an error, BD-ROM Functionality Restricted, what the hell?
A) Download BDEMU.PKG which is in the same thread as multiMAN, the reason this is happening is that the author decided to remove the payload to avoid legal troubles (Can't Blame Him).
Q) I'm seeing almost everybody talking about a 3.6x Spoofer and the likes. What does it actually do?
A) Many people get confused on the actual use of a spoofer. What it does is, it makes your PS3 'think' that it is on the latest firmware and so prevents any updates that nowadays most games come up with. It does NOT automatically enable us to play new games, since they are ENCRYPTED with 3.60 keys, which we currently don't have access to currently. BUT, this spoofer, when used in conjunction with a debug/retail update signed with the 3.55 keys, it can allow certain games to be played (example inFamous 2, etc.)
Q) That's all fine, but what about PSN?
A) Until now we had been using Team rebug's spoofer or PS3ITA CFW to access PSN, but all those methods have since been patched by SONY. So now, you have to stay offline. Also, remember using all these methods has a high risk of you getting banned, so use them wisely.
Q) Now, would you recommend some homebrew apps?
A) You can search around this site for ones that would probably come in use to you, but I recommend Showtime Media Player , it has it's fair share of bugs, but it does work smoothly, and guess what?Supports MKV files. Also, I would recommend a FTP app, but if you're using multiMAN, it should come with the package.
Q) I'm still getting some errors?
A) If all of this STILL does not answer you doubts then please create a thread in the Help And Support section and you're problem will be resolved, please note that discussion of 'warez' is not allowed.
Credits:- Thanks to the PSJailbreak team that started this revolution even though they committed daylight robbery with those prices, Mathieulh for porting it to standard devices, Kakarotoks for the first ever CFW (as a proof of concept), fail0verflow for pwning Sony with all their amazing tools, flukes1 for the lv2 patcher, many many more people I can't possibly include and finally to myself for writing this guide.