Cholesterol is a waxy, fat-like substance that occurs naturally in all parts of the body. There is actually a substance called cholesterol, but what is commonly called "cholesterol" is a group of cholesterol-related substances called lipids, of which two are most important: "bad cholesterol" = "low-density lipids" (LDL) and "good cholesterol" = "high-density lipids" (HDL).
Cholesterol is not a foreign, harmful substance, whose presence in the body should be avoided. It is an excessive concentration of cholesterol what is harmful. We may be afraid of eating eggs or meat due to the cholesterol presence there, but there are good reasons why cholesterol is in eggs and meat, in the first place. Cholesterol is a component of every human cell membrane, and it is necessary precursor for bile and for steroid hormones. It also participates in transmission of signals by nerves. High cholesterol may even protect against infections 
Only part (20-50%) of the body cholesterol comes from food, the other part is synthesized by the body, in the liver. If the food contains too little of cholesterol, one's own production of cholesterol increases to compensate for that deficiency. The body needs some cholesterol to work properly but if there is too much in the blood, it can stick to the walls of the arteries. This is called plaque. Plaque can narrow the arteries or even block them causing atherosclerosis.
Atherosclerisis is unquestionably a killer of millions of people, but what causes atherosclerosis is not so clear. Most commonly, cholesterol is blamed for that, but this correlation is controversial at best, since it has never been proven by research completely free of influence of special-interest groups; more of this is discussed below.
High levels of cholesterol in the blood can increase the risk of heart disease. Cholesterol levels tend to rise as a person gets older. There are usually no signs or symptoms that a person has high blood cholesterol (hyperlipidemia), but it can be detected with a blood test. A person is likely to have high cholesterol if members of their family have it, if they are overweight, or if they eat a lot of fatty foods.
The best way to lower cholesterol is by exercising more and eating more fruits and vegetables. That is true, but many people who exercise, eat fruits and vegetables, still have high cholesterol level, experience heart attacks, strokes, and even die, as the result of atherosclerosis. For this reason doctors prescribe statins to millions of patients.
Physicians recognize two types of cholesterol; HDL (high-density lipoproteins) and LDL (low-density lipoproteins). HDL is considered to be "good" cholesterol while LDL is considered to be "bad" cholesterol. Some physicians maintain that for good physical health the ratio between these two be considered rather than the sum, so that a high cholesterol level is not considered an adverse health issue if the ratio between the two (LDL:HDL) is low. Typically the ratio is about 4:1. That ratio can be achieved either by lowering LDL, by raising HDL, or by both ways, by using appropriate medication. Contrary to this belief, very recently published (May 16, 2012) reputable research  announced: „studies failed to show a link between higher concentrations of high-density lipoprotein (HDL and lower heart attack risk. ... studies of HDL-raising drugs have been largely disappointing.“ It is quite disappointing indeed: since neither lowering LDL nor raising HDL helps preventing cardio-vascular diseases, then why are we wasting billions of dollars on those meaningless, if not harmful drugs?
Atherosclerosis and the cholesterol issue are not equally pervading around the world. This is an ethnic-related phenomenon, related somehow to national eating cultures, but not exclusively to them. It is mostly Americans who care so much about cholesterol, yet atherosclerosis kills Americans by millions. So called "French paradox" points out to the well-known fact that many other nations (the French, Swiss, Russians and a number of others) do not have a massive atherosclerosis problem even though their diet is very "unhealthy" by American standards.
The cholesterol research was pioneered in 1950 by Ancel Keys, who came up with a hypothesis that heart diseases were caused by eating high-cholesterol foods, animal fats in first place. Over the following twenty years Keys led an extensive research project, alas, not to test his hypothesis, but to prove it. Keys studied correlation between cardio-vascular diseases (CVD) and concentration of cholesterol in blood in people of 22 nations, but used for publication data from seven nations, only those whose data agreed with his hypothesis. That became his famous "Seven Countries study" (12,763 men only, 40-59 year old). 
Keys was able to indoctrinate the American public, doctors and the pharmaceutical industry, who quickly recognized the huge business potential. Keys’s doctrine still rules, and its legitimate criticism is largely ignored. The criticism is neither trivial non un-professional; here is a typical example: “...careful examination of the death rates and associations between diet and death rates reveal a massive set of inconsistencies and contradictions. . . It is almost inconceivable that the Seven Countries study was performed with such scientific abandon. It is also dumbfounding how the NHLBI/AHA alliance ignored such sloppiness... In summary, the diet-CHD relationship reported for the Seven Countries study cannot be taken seriously by the objective and critical scientist." 
And another example: “One of the largest studies ... used rather questionable methods: all prospective subjects were given the investigative drug (Simvastatin) for 6 weeks, and anyone showing signs of abnormal responses to the drug was excluded from the formal study.”... “ ... and resulted in fully two-thirds of the initial pool of subjects being ineligible for the study.”   If that is not a fraud, what is?
A contributing factor may be a very high consumption of sugar in USA. A statistical American consumes twenty times more sugar now, comparing to Americans two hundred years ago, and that coincides with the growth in heart diseases in that period. 
There is also a growing, although all too slowly, awareness among doctors and scientists that chronic inflammations contribute as much to atherosclerosis as does excessive cholesterol concentration. That is evident especially in case of thrombosis, that is plaques which burst open, sending their fragments into the blood vessels, often clogging them, with grave or fatal results. Inflammation is a beneficial tool of fighting many diseases e.g. bacterial ones, but a long-lasting ("chronic") inflammation is harmful. Study of this subject    concluded: „... markers of low grade inflammation were associated with one another and with future risk of coronary heart disease ..... These findings ... suggest that low grade inflammatory processes may be relevant to coronary heart disease.”
The term "markers of inflammation" requires explanation. If a visible part of the body is inflamed, redness and/or swelling allows to notice it. Inflammation inside the body needs other means of detection, usually the presence of some substances in blood, called "markers", which allow detection of an inflammation and measuring its intensity. The most commonly used marker of inflammation is "C-reactive protein" (CRP). If blood tests show elevated CRP levels repeatedly and consistently, then treatment with anti-inflammatory drugs statins, Aspirin, enteric-coated Aspirin for stomach protection, Tylenol, can be considered. It needs to be remembered though that Aspirin, Tylenol and other drugs from that group cause some burden to the kidneys. If used together with blood pressure-controlling drugs, that burden is severe. If Aspirin or Tylenol etc. is used together with blood pressure-controlling drugs and any diuretic (urination-enhancing) drug is added to the former two, then kidneys are devastated very quickly by that "Triple Whammy".  
The growing awareness of the inflammation factor in cardio-vascular diseases sometimes strays into a dangerous direction: developing CRP-suppressing drugs, instead of developing inflammation-suppressing drugs; that is an equivalent of the saying "killing the messenger".
Even though it is unclear which contributes more to atherosclerosis: high cholesterol level in blood or chronic inflammations, statins, having both anti-cholesterol and anti-inflammatory properties, may be beneficial both ways. The benefits of using statins is not sure though, and it is controversial due to the side effects, being a significant factor in case of statins. 
Statins do lower the risk of dying from a heart attack, but only slightly: In one study (the WOSCOPS trial) 1.6% of previously healthy people had a heart attack within five years if they were not using statins, and 1.2% if they were using statins - less than one half of one percentage point of credit for statins. In another study (the CARE trial) 5.7% of people who had a previous heart attack, had another attack within five years if they were not using statins, and 4.6% if they were using statins - about one percentage point of credit for statins.
National Cholesterol Education Program of The National Heart, Lung, and Blood Institute (NHLBI) has issued the following recommendations on the desirable levels, at which LDL should be kept by medication: less than 70 mg/dl for high-risk groups, less than 100 mg/dl for low-risk groups. These recommendations are lauded by the pharmaceutical industry, and criticized by many independent researchers. An example of the critics: “Instead of preventing cardiovascular disease the new guidelines may increase the mortality of other diseases” (e.g. kidney),” and transform healthy individuals into unhappy hypochondriacs obsessed with the chemical composition of their food and their blood.“  The fact cited in references # 6 and #7 (see above: “One of the largest studies ...") that in the Simvastatin study two thirds of people suffered from adverse side effects, is by no means trivial.
The International Network of Cholesterol Skeptics There is a long list of links and references, whose titles are telling, e.g:
Angell, Marcia Drug Companies & Doctors: A Story of Corruption. By the previous editor of New England Journal of medicine.
Colpo, Anthony - LDL Cholesterol: "Bad" Cholesterol, Or Bad Science. A brilliant review of the cholesterol folly published in Journal of American Physicians and Surgeons
Graveline, Duane - Lipitor, Thief of memory
Kendrick, Malcolm - Cholesterol and the French paradox, the Swiss paradox, the Russian paradox, the Lithuanian paradox etc.
- http://qjmed.oxfordjournals.org/content/96/12/927.full?ijkey=172mwKXqzgmtE&keytype=ref (many references quoted there)
- http://www.webmd.com/salynn-boyles WebMD Health News, „Raising HDL Levels May Not Lower Heart Attack Risk.“
- A. Keys - Seven Countries. A Multivariate Analysis of Death and Coronary Heart Disease, Harvard University Press
- Diet, Blood Cholesterol and Coronary Heart Disease: A Critical Review of the Literature, Volume 2, November 1991
- Heart Protection Study, Lancet. 2002 Jul 6;360(9326):7-22
- http://wholehealthsource.blogspot.com/2012/02/by-2606-us-diet-will-be-100-percent.html Stephan Guyenet, based on statistics from old US Department of Commerce reports and the USDA
- Low grade inflammation and coronary heart disease: prospective study and updated meta-analyses; John Danesh et al., British Medical Journal 2000 July 22; 321(7255): 199–204.
- Heart on Fire, Scientific America, June 1998
- “Recent studies have identified the ‘triple whammy’ in which combinations of diuretics, nonsteroidal anti-inflammatory drugs (NSAIDs), ACE inhibitors (ACEI) and/or angiotensin receptor antagonists (ARA) may impair renal function.” “Drug combinations and impaired renal function – the ‘triple whammy” Katarzyna K. Loboz1, Gillian M. Shenfield
- http://onlinelibrary.wiley.com/doi/10.1111/bcp.2005.59.issue-2/issuetoc British Journal of Clinical Pharmacology, pages 239–243, February 2005
- Beck, Melinda - Can a Drug That Helps Hearts Be Harmful to the Brain? Wall Street Journal 12 Feb 2008