How does a Harddisc work?

A hard Disc is similar to a CD-Drive in that there is a disc spinning. But that is where the similarities end..

A hard Drive is filled with tiny magnetic slots that can be polarized either way. That is, they can be either 1 or 0. Each is called a bit (Remeber binary from school?) 8bits make abyte, and its metric after that.

Now to either read or write to a Hard Disc, the actuator head
Look Here (that is the little sharp thing like a record player head.) will move around to read or write the magnetic "bit"

The actuator head obviously can't move around the HDD. (Hard Disc Drive) So, the platter (The round disc in the picture) spins around the spindle. The speed of the spinning is the RPM thing you see when you buy a HDD. Obviously, higher RPM means better performance.

If you want to know more check this out
Here

As there are many moving parts, all HDD's are subject to wear and tear. So, yes, eventually, most HDD's will die. However, there is no "set" lifetime. As time goes on, some brands are better than others. You just have to do some research on drive reliability