Damane are Seanchan women (for only women can be collared, although a male collar was later described in the series) born with the spark or ability to channel. As the Seanchan believe that these women can cause great damage with the One Power, they are leashed by a controller, known as a sul'dam, or "Leash Holder", who utilize a collar-like tool known as the a'dam. A woman who can channel and who has not been collared is known as marath'damane (Old Tongue: those who must be leashed), and is seen as an abomination. Seanchan consider any Aes Sedai not collared to be marath'damane.
When Hawkwing's son, Luthair first came to Seanchan, he found a vast land that was a seething cauldron of alliances and betrayals and power grabs. Among them were those who called themselves Aes Sedai, though they bore little resemblance to the Aes Sedai of the White Tower. They used the Power in battle, and turned on each other as readily as they did anyone else. It is not known how women were trained in such chaos, possibly by individual apprenticeship.
In the course of conquering this new land Luthair was handed his greatest weapon, the a'dam, made for him by an Aes Sedai who sought to ingratiate herself. It is made of silvery metal, has a collar part (worn by the damane) and a bracelet part (worn by her controller, the sul'dam). They are linked by a leash a few feet in length, though it is later found out that the leash part isn't strictly necessary, and the collar and bracelet will work without it. Either the Seanchan have never realized this (unlikely, in all the centuries of making a'dam) or they prefer not to permit their damane too much freedom.
The a'dam has different effects depending on which part is worn, and who wears it. When collared, a woman who is capable of touching saidar cannot channel more than a thread without becoming violently sick; she cannot move the bracelet more than a foot; she cannot touch anything she considers to be a weapon, and she cannot open her own - or another - collar. Likewise, when worn by a woman who can channel, the bracelet permits the wearer to feel the emotional state of the woman in the collar, to cause her pain or pleasure just by willing it, and to control completely her access to the Source. If she wishes, she can channel, with the damane being nothing more than a conduit. A person who cannot channel will be unaffected by either part. If a man who can channel, or has the potential to learn, puts on the bracelet, both he and the damane suffer pain. If contact is maintained, both die in horrible agony. This is speculated to be because when men and women link unaided, the woman must initiate, while the a'dam forces control of the link to the wearer of the bracelet.
Luthair's dislike for channelers translated itself to the culture he built; damane have the lowest status of any channeler in the Wheel of Time universe. All damane become property, slaves, as soon as they are found to be able to channel. Even those who work closely with damane consider them to be little more than useful and intelligent animals. It would be expected that such a life would make damane incredibly frustrated and rebellious, eager to be free, but in fact the opposite is true. Raised in the Seanchan culture, they honestly believe they need to be collared for the safety of everyone else, and behavior training makes them childlike, obedient, and eager to please. Even when damane are "freed", the conditioning is almost impossible to break, and many freed damane have great difficulty adjusting to autonomy.
Since the start of The Return, several channelers from the Westlands (including several Aes Sedai) have been collared. Although some have successfully escaped from this captivity, most collared Aes Sedai have been effectively broken to the a'dam.
Damane are kept and treated as sentient pets, but their main use is in battle, as fearsome weapons. They are trained in the art of using the One Power as a weapon, preferring fireballs and lightning to more indirect methods. Specially trained ones are able to put on an impressive pyrotechnics show known as the Sky Lights, and they are the only culture known where the Talent for making ter'angreal is still found. The full range of Talents found in these particular channelers is not known, but there are damane who can Heal - although few Seanchan would welcome the help - and some of them have a version of the Foretelling, allowing them to tell 'fortunes'. In many cases this could be pure charlatanry, tying in with a very superstitious culture, but we have seen at least one fortune, detailed and specific, come true. As Sea Folk Windfinders have almost certainly been collared over the years, it makes sense that damane are skilled in weather control as well. The Seanchan damane also have the talent for Delving, or finding and extracting ores from the earth. This talent is mentioned for the first time when Egwene is captured and is shown to have a strong affinity for this Talent. The range and usefulness of these abilities to the Empire have made the Seanchan Empire apparently invincible.