Tracer ammunition
Tracer bullets have a hollow back, filled with a pyrotechnic flare material. Usually this is a mixture of magnesium, perchlorate, and chromium, to yield a bright red color. Tracers allow the shooter to get a good idea where most of the bullets are going, without actually having to look through a sighting apparatus. The shooter typically "walks" his cone of fire into the target by seeing where the tracer is going.
Tracers from M-16 rifles on U.S. Army firing range
Tracers were used extensively in machine guns in World War I, and usually loaded every 4 rounds in ground guns, and every 2 or 3 rounds in aircraft guns.
Tracers were used extensively in World War I and the Vietnam war (by the Vietnamese). Tracers are used by the U.S. marines in nightfire situations.
A disadvantage of tracers is that they show to the enemy the location of the shooter. As an old military proverb puts it, tracers work both ways.
Besides guiding the shooter's direction of fire, tracer rounds can also be loaded at the end of a magazine to remind the shooter that he needs to change his magazine.
Early tracer rounds often had different aerodynamics and even weight from ordinary rounds, so that over long ranges the stream of tracer rounds and the stream of ordinary rounds could diverge. This is less of a problem with modern tracer rounds.
There are three types of tracers: bright tracer, subdued tracer, and dim tracer. The standard tracer starts burning immediately after exiting the muzzle, subdued tracer burns at full brightness after a hundred or more yards to avoid giving away the gunner's position, and dim tracer burns very dimly, but is clearly visible through night vision equipment.
A recent patent (US 2004/99173) covers the use of an LED and capacitor instead of a pyrotechnic compound, in an attempt to stop the tracer being seen from the front. It is a poor idea, and the changed mass of the bullet, already an issue with tracer, would be even worse.
A simpler solution would be to put a simple grill over the back of the bullet, as seen on many traffic lights, to cut the observable angle.