Scene headings (also called sluglines) are used to describe the location of a scene so that a reader knows where it's taking place. Scene headings are broken up into three or more separate components, which are:

          INTERIOR or EXTERIOR
          LOCATION
          SPECIFIC LOCATION (optional)
          TIME

In the linked PDF, you'll notice the scene starts with INT. JENSEN HOUSE - DAY. That tells us the scene is happening inside (INT.), that the location is the JENSEN HOUSE, and that the scene takes place during the DAY. You'll notice that there's another slugline toward the bottom of the page that reads INT. JENSEN HOUSE - DEN - MOMENTS LATER, and tells us that we're still inside, we're still at the Jensen House location, but now this scene is taking place in the Den specifically, and is happening shortly after the previous scene.

The optional "specific location" addition is used when you want to clearly explain that two scenes are related and taking place in different parts of the same location. For example, the Jensen House might be the overall location, but there might be scenes in the den, kitchen, bedroom, etc. that would need to be specifically listed. Similarly, you might have an office location and need to specifically have scenes set in a conference room, boss' office, Jim's cubicle, etc. The goal is to clearly give the reader an idea of where exactly the scene is taking place from reading that single line at the top of the scene.

Some particulars to note:

          Scenes can begin with INT., EXT., or I/E. (interior/exterior, for scenes that move from one to another).
          Locations can be generic or specific. INT. CHRYSLER BUILDING and INT. OFFICE BUILDING both work.
          Locations and specific locations are each separated by dashes.
          Time components, in addition to the standard DAY and NIGHT, can also include MORNING, AFTERNOON, EVENING, LATER, MOMENTS LATER, and CONTINUOUS (carries over from the last scene), among others. They are preceded by a dash.

Your overall locations will be determined by the size and scope of your movie. Generally speaking, you don't need to include redundant information. So if, for example, your screenplay takes place entirely in an office building, you don't really need to start every slugline with INT. or EXT. OFFICE BUILDING before going into a specific location. Similarly, if most of your screenplay takes place at a summer camp called Camp Woebegone, you don't have to write every slugline as EXT. CAMP WOEBEGONE - MAIN CABIN, or EXT. CAMP WOEBEGONE - VISITOR'S CENTER. You can usually jump right to EXT. MAIN CABIN and EXT. VISITOR'S CENTER once the audience understands that they're at the same general location and it isn't changing. Use your best judgment; you want to make sure that your reader is 100% clear on where the scene is taking place, but you don't want to bog them down with a lot of unnecessary detail.

Examples of sluglines:

          INT. HOUSE - DAY
          INT. JOHN'S HOUSE - DAY
          INT. JOHN'S HOUSE - MASTER BATHROOM - DAY
          EXT. THE BRIGHTMAN BUILDING - NIGHT
          EXT. THE BRIGHTMAN BUILDING - VALET STAND - NIGHT
          I/E. STARBUCKS - AFTERNOON
          I/E. PARKING GARAGE - LEVEL 7 - MOMENTS LATER

The action element is where all of your descriptive writing goes. It's called an action element because what usually goes here are character actions (what we the audience will see them doing on screen), but it's also the place where additional information goes if you need to explain something. It's important to keep in mind, though, that you shouldn't include too much information that can't be seen or heard on screen, since the audience will have no way of receiving that information unless it's seen or heard. Some exceptions to this are when you're first introducing a character (in which case screenwriters will sometimes include unseen/unheard info to properly set up a character), when you're making an intentional stylistic choice, or when it's information that's important for the reader to know and will be explained to the audience another way. In general, though, you should avoid including too much information in your action elements that can't be directly translated onto the screen.

Action elements are often broken up into different paragraphs, which typically signify a change in perspective. In the example provided, for example, notice that the first action element (each paragraph is a different element) tells us that the character is pacing through the house and briefly describes the house's setting details. Once the focus changes (to the specific mementos that aren't being boxed up), that information is presented in the next action element.

As a good rule of thumb... not a hard and fast rule that must be adhered to, but rather a helpful point of reference... is that you don't want an action element to be more than four or five lines tops. From a practical perspective, it will increase white space on the page and help readability, but from a writing standpoint, it will also help you gauge how much (or how little, in this case) space you have to work with when it comes to description. If you can't fit a description of the setting into four or five lines, you're likely including too much detail.

In action elements, screenwriters will sometimes use what are called mini-scene headings, often called mini-sluglines/mini-slugs or secondary headings/sluglines/slugs. These are often used by screenwriters when they want to indicate a slightly different settling (or perspective) within the existing scene. In the provided example, the scene heading toward the bottom of the page tells us that we're in the den, but there's a mini-slug to indicate that the focus of the camera for this particular moment should be close on the character's face rather than a wider shot of the entire room. Mini-slugs can be used to clarify and direct the reader, but try not to overuse them, as it's important for the reader to see the movie in their own imagination.

Dialogue actually has three separate elements in it, but for all intents and purposes, when we say "dialogue" we intend to include all three. Just to get them out of the way, the other two elements in this category are Character Name (which is simply the title above the dialogue block that tells you which character is speaking) and Parentheticals (which are the indented lines surrounded inside parentheses). They are both pretty straight forward, but here are a few words about each:

Character Names. In general, a character's name should be consistent throughout the screenplay. The reason for this is because line producers will "break down" the script when it's being prepared for production, which is a fancy way of saying that they go through and figure out all the logistics: how many different scenes they have, which characters speak in which scenes and for how long, etc. If you call a character "James" in one scene and "Mr. Bond" in another, there's a good chance they will be inadvertently interpreted as different characters. Unless there's a very specific reason for doing otherwise (like an obscured or disguised character who is later revealed), each instance of the character name should be the same even if they are referred to in the dialogue itself differently.

Parentheticals. Parentheticals are the place where you can work in minor stage direction or information the reader needs to know without a whole separate action line. In the sample provided, notice that there are both. At the very beginning, it says "into phone" so the audience knows that the character is speaking into the phone rather than projecting the line out into the room. And later, it says "pause" in a few places to indicate the character's dialogue should stop to imply that he's listening to the other end of the phone conversation before continuing. Like the mini-slugs referenced above, it's important to not overuse parentheticals. There are many other people who work on a movie, and the director and actors will likely have their own interpretations of how to deliver a line, or what "stage business" (minor movements and actions) to use. Generally speaking, it's a good idea to only include parentheticals if they are the most efficient way to convey information, or if they're being used to clear up what could potentially be a confusing or ambiguous aspect to how the line should be delivered.

The last element of a screenplay is the transition element. These are used to indicate the way in which the scenes move from one to another. The most common transition is "CUT TO:" which means that one scene ends at the exact moment another begins. There was a time when CUT TO: appeared between every scene, but that has fallen out of favor and it's now assumed that every scene transition is a CUT TO: unless the transition is specifically mentioned as one of these others:


          DISSOLVE TO:
          FADE OUT:
          FADE IN:

There are other minor transitions for specific purposes (e.g. JUMP CUT:, SMASH CUT:, FADE TO BLACK, etc.), but we'll get into those specifics in future discussions. For now let's focus on the three primary: cuts, dissolves, and fades.

FADE IN: is when a picture transitions in from a point where there's no scene before it. For example, opening scenes in movies often involve a FADE IN: where you're watching a black screen or title sequence before we "fade in" to the first scene of the film.

FADE OUT: is the exact opposite. It's when a picture transitions from a scene to a point where there's no scene after it. For example, closing scenes in movies often involve a FADE OUT: where you're watching the last scene of the movie "fade out" to the black screen or end crawl (scrolling end credits) of a movie.

DISSOLVE TO: is when one scene fades out while the next scene fades in. There's no black or anything in between, it's literally one scene overlaid on top of another as the first fades out and the second fades in.

It's important to note the distinct different between a DISSOLVE TO: (again, when one scene fades out while another scene fades in), and a FADE OUT: followed by a FADE IN: (which is when one scene fades out entirely - to a black screen for example - before the next scene fades in). A FADE OUT:/FADE IN: is generally much slower and more deliberate than a DISSOLVE TO:, and is typically reserved for moments when you want a clear separation between your scenes.