A Slug Line identifies key information about a given shot or scene, and typically includes an interior or exterior designation, a location, and a time of day.  Also known as Scene Header or Shot Heading, a slug line informs the reader of a change in scene or focus.  Sometimes the term is used more loosely to refer to any direction that tells production personnel--such as directors, actors, or crew-- how to handle a given scene or shot.

History

The term "slug line" comes from printing. Before automation, the
compositor of a printing press would insert temporary type lines with
instructions or identification marks, which were referred to as "slug
lines." Again, the slug lines were metatype: type that was used as
information for he printer rather than type that was actually printed
for the readers. Even this term comes from the term "slug," which
refers to lead plates or blocks that are used for spacing when
creating copy in hand printing. "Slug" can also refer to the type
itself that is created from molten metal poured into a mold.

Format

Basic Format

Although variations and extensions exist, there are three generally
accepted parts of a slug line, and they always occur in the same order:

INT./EXT. LOCATION - TIME

Slug lines are written in all capital letters. First, you state if the
scene is inside or outside by writing shorthand for interior or
exterior: INT or EXT. Second, you state the location in full words,
but not descriptive. Then you put a dash (less commonly simply two
spaces), and last you write the time of day, usually simply DAY or
NIGHT, although occasionally something more descriptive like DAWN,
DUSK, NOON, MAGIC HOUR, etc., may be used if it serves the scene
better, although these should be used sparingly, if at all (see
guidelines and tips below).

Here are a few examples:

EXT. LUCY'S HOUSE - JENNY'S ROOM - DAY
INT. TOOL SHED - NIGHT
EXT. PUBLIC RESTROOM - NIGHT
INT. BOSS'S OFFICE - DAY

Slug lines in shooting scripts are typically numbered, allowing for
easy reference during filming or discussion.

If a scene has both interior and exterior elements -- such as a scene
that takes place in and out of a car -- the following format is
standard --

INT./EXT. DAVE'S CONVERTIBLE BMW - DAY

Either "INT./EXT." or "EXT./INT." is acceptable, although the leading
designation implies that more of the scene takes place in that
environment (interior or exterior).

Variations and Extensions

Although the above basic format is typical for many scenes, there are
many acceptable variations and extensions to the basic format. Most
scenes that take place in a different place or time to the preceding
scene will begin with a master scene heading, for example --

EXT. ITALIAN RESTAURANT - NIGHT (ESTABLISHING)

Crowded with lots of cars and people coming and going.

INT. ITALIAN RESTAURANT - NIGHT

Just as crowded inside.

Slugs within a scene can then be very short and used as a quick way to
designate the focus of a shot within a master scene, be it a person,
as in --

GUIDO

slurps pasta into his mouth.

A significant prop, as in --

MATT'S GUN

lies smoking on the ground.

Or some other subject that the writer and/or director thinks deserves
the camera's focus, as in --

GUIDO'S HAND

loses its grip on a fork.

Sometimes the slug is merely the type of camera shot envisioned --

CLOSEUP - GUIDO'S FACE

cringes in pain.

Or the type of camera shot could be a part of a fuller slug line as in
the use of MOVING here --

EXT./INT. DAVE'S CONVERTIBLE BMW - MOVING - EARLY MORNING

There's an evolving list of generally accepted shot types and
slug-line extensions or abbreviations, each with their various usage
guidelines. See any of the following for more details: ANGLE, ARIEL,
BIRD'S EYE, CLOSEUP, CONTINUOUS, DUTCH TILT, ESTABLISHING, EXTREME
CLOSEUP, HANDHELD, INSERT, LATER, MEDIUM, MOVING, POV, REVEAL, THREE
SHOT, TRACKING, TWO SHOT, UNDERWATER, and WIDE.

There are also a variety of other types of special scenes or sequences
that have their own unique formatting guidelines. These include DREAM
SEQUENCE, FLASHBACK, INTERCUT, MONTAGE, SERIES OF SHOTS, and SPLIT
SCREEN.

Guidelines and Tips

Keep 'em Short

Keep slug lines short and sweet. Screenplays should look uncluttered
with lots of white space, so extensive slug lines can detract from
this professional convention. For example, this --

INT. SEEDY BAR - NIGHT

DAVE

downs a beer.

Is better style than this --

INT. A MANHATTAN-BASED SEEDY BAR - DAVE - EXTREME CLOSEUP - VERY LATE NIGHT

Dave, now seemingly at rock bottom, downs a beer.

Articles such as 'a', 'an', 'the', and 'of' should typically be
avoided, as well as most other extraneous description that does not
add anything to the story (VERY LATE NIGHT versus simply NIGHT).

Leave Direction to the Director

Speculation (spec) screenplays should typically not include camera
direction in slug lines or anywhere else for that matter. There are
exceptions and screenwriters will often cheat a slug, but direction is
best left to the director and placed into the shooting screenplay for
a given property. Even if you are the writer AND the director, it's
still typically best to keep camera direction out of a spec (also
known as reading) screenplay because they are distracting to readers
of your screenplay.

No Action, Dialogue, or Effects

Slug lines should not contain action, dialogue, or effects of any
kind. The slug line stands alone to draw the reader's focus. For
example, this is correct style --

GUIDO

slurps pasta into his mouth.

Not --

GUIDO SLURPS PASTA INTO HIS MOUTH

Although this short-cut is tempting and is often used by both novices
and pros --

GUIDO slurps pasta into his mouth.

It's still preferred to put the action on its own line to be better
conform to the One Minute Rule (one page on the screenplay equals one
minute on the screen"]] because extensive action needs to be spaced
out if we are to trust that a given screenplay, if produced into a
motion picture, will adhere to the rule.

DAY/NIGHT Are Good Enough

In almost all cases, and what's become generally accepted advice, just
use "DAY" or "NIGHT" as the time of day for a Slug Line instead of
more specific designations like "VERY EARLY MORNING", "10 PM", "MAGIC
HOUR", etc., particularly in speculation screenplays. Why? More often
than not, they just detract from the story and clutter it to readers,
and are better put in action sections if at all.

Additionally, the "DAY" and "NIGHT" designation is helpful to the
lighting crew who simply want to know whether or not the scene will be
shot during the day or during the night. To them, "10 PM" is "NIGHT"
and that's all they need to know.