As with any other aspect of Japanese life, there are specific procedures and rules of etiquette to follow when drinking in various social settings. 

Here are a few basics:

• Never fill your own glass
• Never let somebody else's glass get empty
• Hold your glass with both hands when being poured
• An overflowing pour symbolizes an overflowing friendship

To watch an American navigate the sake drinking scene, watch Zane Lamprey's show "Three Sheets" here

The Japanese say that good sake will not give you a hangover, but this may just be because the Japanese are constantly eating while they are drinking.  This phenomenon gave rise to a whole industry of venues that serve a variety of appetizers to munch on while you drink (izakaya).

Bars seem to be one of those areas of Japanese culture where one can break outside of strict social constraints.  Because of this, drunkards are well accepted in public, including when sleeping in train stations.  Even the way beer is advertised suggests that drinking can provide an alternative to the regimented Japanese lifestyle.

There is such a thing in Japan as "kids' beer" and "kids' wine".  Nonalcoholic beverages that resemble beer or wine in apperance (and possibly taste) are widely marketed towards children.

Beer is the most popular alcoholic drink in Japan, although sake (rice wine) is the national beverage.  Other liquors, like whiskey, are also popular.  If you are a regular at a bar, you can even use their bottle keeping system in which you buy a whole bottle of liquor that is reserved for you at the bar.  Here is a good link for a basic run down of the various types of alcoholic beverages widely availble in Japan.

KAMPAI!!!  (cheers)

Also See:

Japanese Drinks

Japanese Nightlife