At some point in Madara's early life, he formed an alliance with the Senju Clan of the Forest, Hashirama Senju's clan, and together with its leader, the future First Hokage, Madara founded Konohagakure. They fought over the laws that should be made in the new village, which led to a battle at the Valley of the End, the battle ending with Madara's defeat, but not death. Madara fled, and was never seen or heard of again out in the public for decades. To commemorate the battle, two statues, of Madara and the First Hokage, were carved into the earth around the waterfall. It is for this reason that Naruto Uzumaki and Sasuke Uchiha's fight at that location was noted to be ironic.
Madara created the criminal organization known as the Akatsuki to look over problems. He hid behind the shadows and placed Pein as the figure-head leader, with Madara giving Pein orders from the background. Outside of Pein, the only members who are shown knowing Madara's position as the true leader are Konan, Zetsu and Itachi.
It has been revealed that Madara did in fact control the Nine-Tailed Demon Fox and used it to attack Konoha. The demon fox remembers and hates Madara for controlling it, and it compares Sasuke's eyes, as well as his chakra, to be as evil as Madara's.
Madara's failure to unleash the demon fox to destroy Konoha made him give up, and so he taught Itachi about the Mangekyo Sharingan and helped him to destroy his entire clan, also teaching him how to unlock its true power. After they killed off the clan, Madara let Itachi into Akatsuki. Itachi refers to Madara today as "a pathetic shell of his former self, no longer worthy of being called the greatest Uchiha."
As a member of Akatsuki, his personality is almost emotionless and possesses incredible self control. He only shows surprise when opponents prove more powerful or skilled than he had expected, and even then, it does not impede him. He does not display a typical villainous arrogance and any brags he makes regarding his power are often fully justified. However, he does allow himself the occasional smile if his opponents match his expectations. Despite his status as a wanted criminal and having murdered a significant portion of his family, Itachi does not display any open enjoyment of violence or combat, instead prefers to avoid battle or, if he could not, end it as quickly as he can while exerting as little effort as possible.
Itachi's only initial interest is in Akatsuki's goals and his only loyalty to be to the organization and its members, putting the organization's success and secrecy before everything else. As such, Itachi gets along with his partner, Kisame, much better than most other Akatsuki members do with their own partners. Kisame, in fact, has a deep loyalty to Itachi, immediately doing as he instructs and constantly looking out for his well-being. Itachi treats all of his fellow Akatsuki members to this same, more respectful personality, and his courtesy is often not returned by the other members.
Sasuke's given name comes from the legendary ninja Sarutobi Sasuke. His surname, Uchiha, is another way of pronouncing "uchiwa", or a paper fan, which is actually the Uchiha clan symbol. Uchiwa cannot be folded. In contrast, Ōgi, which Temari uses as her weapon, can be folded. Although both uchiwa and ōgi produce wind by fanning, the former is used in more practical/everyday situation such as cooking or commoners cooling themselves down during a hot summer day. The latter is considered to be more formal. Uchiwa can be used to fan flames, making the flame hotter — referring to the fact that the Uchiha is a clan of fire-jutsu users.
In Shonen Jump's June 2006 edition, Masashi Kishimoto (in Kakashi's voice) remarks that while Sasuke is a genius, he is a little dull to teach because he learns everything easily compared to the less predictable Naruto.
In Shonen Jump's character popularity polls, Sasuke usually ranked the 3rd or 4th spot for the majority of the series. More recently, however, he has been ranked at 1st.
Obito was a 13-year old Chunin in Team Minato with Kakashi, Rin and of course, Minato Namikaze (he wasn't Hokage yet). He's very similar to Naruto Uzumaki, goofy and desperate to prove he is a worthy ninja, mostly unrespected by peers and teachers alike. However, he is ready to put his life on the line for his teammates without hesitation. Obito carries the blood of the Uchiha Clan and has the power of the Sharingan within him.
Kakashi saved his life, but when they were fighting with a Rock ninja, Obito saved Kakashi's life as well, which caused him to be hit by a torrent of falling rocks. The whole right side of his body was crushed, slowly killing him. When Kakashi went to his fallen teammate's side, however, in confirmation of their friendship and as a gift for Kakashi gaining Jonin rank (Obito was the only member of the team not to have given Kakashi a gift), Obito gave Kakashi his left eye, and the Sharingan with it.
The Mangekyo Sharingan (万華鏡写輪眼, Mangekyō Sharingan; Literally meaning "Kaleidoscope Copy Wheel Eye") is a heightened form of Sharingan. The Mangekyo Sharingan is distinguished from a normal Sharingan through its appearance, which changes the form of the tomoe seal. However, unlike the Sharingan, it has a different appearance between the users, as a kaleidoscope never looks the same when looked through. Kakashi's version is significantly different than Itachi's, as Madara's looks completely different, and his brother's looks different also. Those who have the potential to obtain it must make a great sacrifice in order to obtain it – according to Itachi, they must kill their closest friend. Itachi, Madara, and his brother apparently do in fact do this to obtain the original version, but Kakashi has noted that everyone he cared about had died long before the start of the series, so how he developed his own variant is unknown. And apparently, the Mangekyo Sharingan can be transferred from person to person, as in the case with Sasuke. The major drawback of the Mangekyo Sharingan is that when it is first activated, it slowly begins to destroy the eyes, until the user becomes completely blind. The only way to regain one's eyesight after losing it would be to steal the eyes of a sibling, combining the two Sharingan to create a new, more powerful, and immortal Mangekyo Sharingan, which prevents blindness and apparently grants immortality.
In the long history of the Uchiha clan, only a few have been able to obtain the Mangekyo Sharingan, Madara Uchiha being the first, and his brother being the second. At present, there are three live people who can use the Mangekyo Sharingan: Kakashi, Madara, and Sasuke, although getting his from his brother, Itachi, from unknown methods.
Mangekyo Sharingan can release 3 deadly jutsus, they are Tsukuyomi, Amaterasu, and Susano'o. Although these jutsu are extremely devastating, they require an enormous amount of chakra, and also cause immense strain and eventually blindness on the user. The same may not be said about Susano'o, however, since Itachi was out of chakra when he decided to use it. Susano'o may not even require Mangekyo Sharingan to be activated, but the Mangekyo Sharingan must at least be obtained.