How can I have an application associate with a file type?

Question

I want to replicate built-in tools on most operating systems such as an image viewer, but I want it to be a nice integrated usage.

1. How can a program be "executed on" a clicked image file?
2. How can the step up required for this file to application association be made easy for a user?
3. How does the program know how to handle the image after it is clicked?

I understand that the file association is stored in registry and that the image file data is passed into the program, but I don't know where to begin to code something like this. The resources I've come across seem to be outdated.