The quarantine tank is also known as the hospital tank. Whatever you call it the purpose is the same... to protect and treat your fish for disease.
The understanding of fishkeeping has evolved greatly during the past 10 - 15 years and as a result the equipment and treatments available today have improved tremendously. Bottom line is, more and more people are getting into fishkeeping and their success rate has also significantly increased.
Whether you are a beginner or a veteran, you should strongly consider using a quarantine/hospital tank.
If used properly, you can successfully avoid the spread of possible diseases often introduced to the aquarium with the purchase of a new and potentially sick fish. Most fish death occurs within the first 2 weeks of the purchase.
The leading cause for illness is extreme stress and poor environmental conditions during the breeding and transportation of many fish. Therefore newly purchased fish should be quarantined and observed for illness for 7 days before released into your healthy tank.
Setting up the quarantine/hospital tank is quick, easy and really fairly inexpensive. In most cases a ten gallon tank will do just fine. Consider buying a kit which includes everything from filtration to heater and light. Of course a old aquarium sitting around the house will do just fine.
Basically you'll need a heater, filter (corner filters are the cheapest and yet efficient), air pump and stone, a cover and some type of lighting. The light is optional, depending where the tank will be setup.
A quarantine tank should preferably be setup a few days before you plan on using it. To get the biological filtration going quickly, use as much water from your established tank as you can spare. If you're running a 10 gallon tank, using approx. 3 gallons for the hospital tank will kick start the filtration and not harm your display tank. If the tank is larger, you may be able to extract the entire 10 gallons for your hospital tank.
Also use some of the gravel from your established tank, place it in a nylon mesh bag (a panty hose will also work great) and put it in your hospital tank. This will also help initiate the biological filtration. DO NOT USE GRAVEL in the tank bottom. It's a temporary setup and you won't need gravel.
As far as the filter, consider running it permanently or for several days before use, on your established aquarium. Again, you'll "kick start" the biological filtration doing this.
You could permanently run a quarantine tank as long as the fish that go from the store into the tank do not develop or show any symptoms of disease. Simply change some water at regular intervals and it should always be ready to use.
If, however a fish becomes ill, and/or you treat a sick fish in the tank, then you must empty and clean the tank thoroughly before using it again.
Generally, you will want to quarantine new fish for two weeks to be sure no symptoms develop.
This is a real good way to protect your current fish from the potential dangers of new fish introduction.
If you are fairly new to the hobby, a hospital tank will definitely help you be a more successful hobbyist, and the involvement can be plenty of fun as well. This is how we interact with our aquatic pets.