There is no mention in the Torah or Talmudic laws that a head covering must be worn by Jewish men. The kippah (Hebrew), or yarmulke (Yiddish) is not a traditional part of the Jewish identity, but a more modern expression of faith and devotion. While men alone wear kippot (the plural form of kippah) in Orthodox communities, women also wear them in some Reform and Conservative congregations.
The kippah itself is a Jewish head covering, traditionally made from cloth and smaller than a hat. It is often worn underneath a hat, in order to adhere to Western traditions of removing the hat out of respect without forgetting the Jewish tradition of covering the head in reverence to the powerful force above him. The wearing of kippot is a custom, not a law.
The members of the Orthodoxy wear small black velvet kippot, often underneath large brimmed black hats. On special occasions and holidays the Chassidim wear a streimel (a fur lined hat). The Modern Orthhodox often wear smaller knit kippot, traditionally knitted by girls for their boyfriends. Larger knit kippot are often a sign of Askenazic heritage (Eastern European roots) and are most commonly seen in Israel. Many Reformed Temples traditionally forbade the practice of wearing kippot, but in the past 20 years this attitude has shifted, and even women can be seen alongside men wearing kippot in the Reform community.
In Biblical times, the Temple priests were instructed to cover their heads. ". . . and turbans shalt thou make for them, for honour and for beauty" (Exodus 28:4-40). The Prophets and the Writings also mention head coverings as a tradition involved in the practices of mourning. The first actual reference to the kippah, however dates to the 17th century when David Halevy of Ostrog reasoned the need to differentiate from the Christian prayer observance by having Jews cover their heads.
The covering of the head by the kippah is a constant reminder that there is a higher power above our heads. In Orthodox Judaism, man's reason is valuable, but it is his recognition of G-d that makes him divine.
A story told in the Talmud relates that a mother was told by a fortune-teller that her son would be a thief. Upon seeking the advice of the Rabbis, she was instructed to keep the boy's head covered for the entirety of his life. The theory was that the boy would grow up with the ever present knowledge of G-d. The boy did not become a thief, but a Rabbi. One day, while napping under a fruit tree, a wind blew the Kippah off, and the Rabbi ate the fruit from the tree that was not his, and had an urge to continue stealing until the kippah was placed back on his head.