Why do I need anodes?

Sacrificial anodes protect your boat's hull, engine, rudder, propeller shaft and other metal parts of your boat located below the waterline from the damaging effects of galvanic corrosion.
If you want to protect two different metals that are in contact in water (think about your bronze propeller and stainless steel shaft), you need to connect a third metal that's more active than either bronze or stainless steel.
Take zinc for example, especially if you're a saltwater boater.
Once securely bolted to your stainless prop shaft, zinc becomes an anode and sacrifices itself (corrodes away) to protect the other two metals, hence the term "sacrificial anode."

Which anode is right for my boat?

As a rule of thumb, use zinc anodes in salt water, aluminum anodes in brackish or salt waters, and magnesium anodes in fresh water.

Salt Water: Zinc and aluminum prevent galvanic corrosion and protect engine and underwater parts of your boat in salt water.

Brackish Water: Aluminum is a good choice where salt and fresh water mix, and a logical compromise if you use your boat in a variety of water types during the season. Zinc is too passive for brackish water, and magnesium corrodes too quickly because of brackish water's salt content.

Fresh Water: Magnesium is the only alloy proven to protect your boat's engine parts in fresh water. Do not use magnesium anodes anywhere other than in freshwater applications.

Quality matters.

Not all zinc and aluminum alloy anodes are created equal.

Cheaper or sub-standard anodes may eventually cause more (and potentially expensive) corrosion problems.

Look to make sure the anodes you buy are manufactured to meet or exceed the following US

Military Specifications:
Zinc: MIL-A-18001K
Aluminum: MIL-A-24779(SH)
Magnesium: MIL-A-21412

How often should I replace the anodes on my boat?

Anodes should be changed out when they've corroded to 50% of the original size or, at least, on an annual basis.
To be safe, make replacing your anodes part of your pre-launch routine every year.

Some general tips

Never paint anodes - they won't work if they're covered up. Remove any traces of paint and clean metal surfaces to be protected, ensuring good electrical contact with anodes.

Corrosion increases as water gets saltier, and warmer. The rate of corrosion can double with every 18 degrees Fahrenheit increase in water temperature. Are you thinking of taking your boat south for the winter?

Keep paint on engines and sterndrive units in good condition. Don't use copper-based antifouling paint on sterndrives because the copper in the paint will increase galvanic corrosion.

Anodes work on sterndrives only if you leave your sterndrive unit immersed in the water.

Don't mix zinc anodes on your boat's hull with aluminum anodes on the sterndrive. Aluminum anodes will protect the zinc anodes in addition to the sterndrive unit.

Magnesium corrodes quickly in salt and brackish waters, may damage engine and underwater metal parts of your boat and leave you with no corrosion protection in a short period of time.

Do not use zinc anodes on aluminum sterndrives.

Be sure to use the appropriate marine-grade fasteners (316 stainless steel, bronze, monel) when installing anodes.