There are two places where Java Script can be used in HTML, inline events and <script> tags:
// inline event
<div onclick="new Effect.Appear('mydiv')">click me</div>
// script tag
<script type="text/javascript">
// <![CDATA[
new Effect.Appear('mydiv');
// ]]>
</script>
// script tag refering to an external JavaScript file
<script src="prototype.js" type="text/javascript"></script>
Events can also be created programmatically (e.g. with the Prototype library Event.observe function).
See Wikipedia for a more thorough description of JavaScript