I found this great book at the local library which had lots of information on what the TARDIS is and how it works. It is called The Doctor Who Technical Manual and was written by Mark Harris in 1983. Here is the description contained in the book:
The Doctor roams the Universe in a vehicle known to its inventors, the Time Lords, as a TARDIS. The letters stand for Time And Relative Dimensions In Space and , as this title suggests, it is far more than just a time machine. It is capable of transporting its operator and passengers through time and space to any planet in the Universe and to any point in that planet's history.
The Doctor's is an old 'type 40' TARDIS, also known as a Mark I, built as a mobile research laboratory which would carry its crew of scientists to survey distant galaxies, explore fabulous new worlds and observe astronomical events. The type 40 TARDIS has since been superseded by more efficient and better equipped models.
From the outside, the Doctor's TARDIS resembles a Metropolitan Police Telephone Box. This is due to the chameleon circuit, a device incorporated into the ship's circuitry, which scans the landing site and then alters the exterior just prior to materialisation. Under normal circumstances, the TARDIS would look like a tree, a rock or anything else which would blend with the surroundings of the planet on which it has landed. Unfortunately, after the Doctor's visit to Earth in the early 1960s (Earth time), this mechanism failed to function and ever since, the TARDIS has remained locked in the form of a Police Box.
The TARDIS is totally indestructible and if its exterior is attacked it will dematerialise instantly rematerialising close by, but out of danger, providing the Doctor has sent the H.A.D.S. (Hostile Action Displacement System). Amazingly, the TARDIS is infinitely bigger on the inside than the outside. This is due to one of the key discoveries made by the Time Lords, that or temporal physics. On entering the TARDIS through the outer door, one actually crosses a bridge into another dimension. The exterior of the TARDIS 'exists' in the real world, but the interior is within a different but relative dimension. The gleaming white interior of the control room contains the very nerve centre of the craft, the main control console, which has many different flight functions. The main ones are:-
NAVIGATION - from which the Doctor plots his course.
GUIDANCE SYSTEMS COMPUTER - ensuring that the TARDIS remains on course.
ENVIRONMENTAL CONTROLS - to maintain such things as temperature, gravity, atmosphere, etc, within the TARDIS.
DRIVE SYSTEMS - The master dematerialisation switch is mounted on this panel; which activated it engages the ship's power source, thus causing the exterior atoms to dissolve from the real Universe and reassemble in the time vortex.
Located at the centre of the control console is the time rotor. This is a transparent cylindrical column containing various instruments. It rises and falls during flight, each time providing the Doctor with a complete status report on the ship's power source. On the wall behind the control console is a scanner, a viewing screen which offers a view outside the ship.
The TARDIS is completely self-contained. Its labyrinth of halls, passages, dormitories, storage areas and laboratories contains a vast wardrobe of clothes and costumes from many planets and cultures. This can enable the TARDIS crew to visit other worlds and period without drawing attention to themselves.
So advanced is Time Lord technology that the TARDIS may be said to be semi-sentient - that is to say, it is almost a living, thinking entity. It is attuned to the Doctor's thought patterns and is telepathically linked to him.
