You can store the following file types in ASM diskgroups:

Datafiles
Control files
Online redo logs
Archive logs
Flashback logs
SPFILEs
RMAN backups
Temporary datafiles
Datafile copies
Disaster recovery (DR) configurations
Change tracking bitmaps
Datapump dumpsets

ASM provides the following functionality/features:

Manages group of disks, called diskgroups. Must be careful while choosing disks for a
diskgroup.
Manages disk redundancy within a diskgroup.
Provides optimal I/O balancing without any manual tuning.
Enables management of database objects without specifying mount points and filenames.
Supports large files.
Replacement for CFS (Cluster File System).
Also useful for Non-RAC databases.
A new instance type - ASM is introduced in 10g.
ASM instance has no data dictionary.
A Disk can be a partial, full or a LUN from the RG.
I/O is spread evenly across all disks of a diskgroup.
Disks can be dynamically added to any diskgroup.
When combined with OMF increases manageability.
ASM cannot maintain empty directories “delete input” has issues, create a dummy directory.
Use of ASM diskgroup is very simple create tablespace.
Enterprise Manager can also be used for administering diskgroups.
Only RMAN can be used with ASM

Introduces three additional Oracle background processes – RBAL, ARBx and ASMB.

ASMB - This ASMB process is used to provide information to and from cluster
synchronization services used by ASM to manage the disk resources. It's also used to update
statistics and provide a heart beat mechanism.
Re-Balance, RBAL - RBAL is the ASM related process that performs rebalancing of disk
resources controlled by ASM.

Re-Balance, RBAL - RBAL is the ASM related process that performs rebalancing of disk
resources controlled by ASM.

ASM instance has it own set of v$views and init.ora parameters.

The advantages of ASM are

Disk Addition - Adding a disk is very easy. No downtime is required and file extents are
redistributed automatically.
I/O Distribution - I/O is spread over all the available disks automatically, without manual
intervention, reducing chances of a hot spot.
Stripe Width - Striping can be fine grained as in redolog files (128K for faster transfer rate)
and coarse for datafiles (1MB for transfer of a large number of blocks at one time).
Mirroring - Software mirroring can be set up easily, if hardware mirroring is not available.
Buffering - The ASM file system is not buffered, making it direct I/O capable by design.
Kernelized Asynchronous I/O - There is no special setup necessary to enable kernelized
asynchronous I/O, without using raw or third-party file systems such as Veritas Quick I/O.

The initialization parameters that are specific to an ASM instance are:

INSTANCE_TYPE - Set to ASM. The default is RDBMS.

ASM_DISKGROUPS - The list of diskgroups that should be mounted by an ASM instance
during instance startup, or by the ALTER DISKGROUP ALL MOUNT statement. ASM
configuration changes are automatically reflected in this parameter.
ASM_DISKSTRING - Specifies a value that can be used to limit the disks considered for
discovery. The default value is NULL allowing all suitable disks to be considered. Altering the
default value may improve the speed of diskgroup mount time and the speed of adding a disk to
a diskgroup. Changing the parameter to a value which prevents the discovery of already
mounted disks results in an error.
ASM_POWER_LIMIT -The maximum power for a rebalancing operation on an ASM instance.
The valid values range from 1 (default) to 11. The higher the limit the more resources are
allocated resulting in faster rebalancing operations. This value is also used as the default when
the POWER clause is omitted from a rebalance operation. A value of 0 disables rebalancing.
ASM_PREFERRED_READ_FAILURE_GROUPS - This initialization parameter value (default
is NULL) is a comma-delimited list of strings that specifies the failure groups that should be
preferentially read by the given instance. This parameter is generally used only for clustered
ASM instances and its value can be different on different nodes. This is from Oracle 11g.
DB_UNIQUE_NAME - Specifies a globally unique name for the database. This defaults to
+ASM but must be altered if you intend to run multiple ASM instances.
Oracle Automatic Storage Management Cluster File System (Oracle ACFS) is a multi-platform,
scalable file system, and storage management technology that extends Oracle ASM
functionality to support customer files maintained outside of Oracle Database. The Oracle ASM
Dynamic Volume Manager (Oracle ADVM) provides volume management services and a
standard disk device driver interface to clients. For information about Oracle ACFS and Oracle
ADVM

Oracle ASM also has easy to use management interfaces such as SQL*Plus, the Oracle ASM
Command Line Utility (ASMCMD) command-line interface, Oracle ASM Configuration Assistant,
and Oracle Enterprise Manager.

Oracle ASM Instances

An Oracle ASM instance is built on the same technology as an Oracle Database instance. An
Oracle ASM instance has a System Global Area (SGA) and background processes that are
similar to those of Oracle Database. However, because Oracle ASM performs fewer tasks than
a database, an Oracle ASM SGA is much smaller than a database SGA. In addition, Oracle
ASM has a minimal performance effect on a server. Oracle ASM instances mount disk groups to
make Oracle ASM files available to database instances; Oracle ASM instances do not mount
databases.

Oracle ASM is installed in the Oracle Grid Infrastructure home before Oracle Database is
installed in a separate Oracle home. Oracle ASM and database instances require shared
access to the disks in a disk group. Oracle ASM instances manage the metadata of the disk
group and provide file layout information to the database instances.