I haven't got my two chipped - yet. But its on the list for their next vet visit. My three cats are all chipped though.
All it is is a little grain-of-rice sized chip that is inserted under the skin. One of my cats did develop a bit of a lump where it'd been inserted, but that disappeared after a month or so. Neither of the other two had any reaction at all.
I guess the other thing to know is that the chip might move (not that you'll know it, LOL, and it'll stilll be read by the scanner, of course). That's perfectly normal, basically its just sitting under the skin, so can move around a bit until enough flesh grows round it to keep it in place. Won't bother your dog at all.