[bizerl (OP)]

My understanding thus far...

At some stage, our immune system comes up against a bug that it has never seen before and somehow makes antobodies to combat it. These antibodies stay in our system so that the next time we get the same bug, our immune system already "knows" how to fight it.

What's the mechanism by which these antibodies are created? Is it just trial and error or are there some sort of immune stem cell that can change into any antibody you like?

[evan_au]

There are many parts to the human immune system, but the question is asking about the "Adaptive" immune system, that can learn and remember threats for more rapid future response.

Antibodies are generated by immune cells which randomly mix and match genes from a set of segments inherited from the parents - some estimate up to 10 billion permutations, which have a high chance of matching an invading body.

Unfortunately, this huge diversity of matching patterns is also likely to match some tissues within the body, causing autoimmune diseases. The thymus eliminates any antibodies which attack the body's own tissues. Any immune cells which survive this pruning go into circulation. If they find a matching threat, they start to multiply and attack the invader. Then they stay on alert, looking for a future return of the invader.

See:
http://en.wikipedia.org/wiki/Antibody
http://en.wikipedia.org/wiki/Thymus
http://en.wikipedia.org/wiki/Immune_system#Adaptive_immune_system

[evan_au]

The variety of patterns that the immune system can match are inherited, and exist in a wide variety of gene variants in the population. A group of immune molecules called the Major Histocompatbility Complex (MHC) plays a role in recognising foreign proteins.

With inbreeding, there is an increased chance that you will receive two copies of the same pattern, rather than 2 different patterns from your parents. This potentially reduces the range of attackers that can be recognised by your immune system, and makes you more susceptible to disease.

It has been observed that sexual partners are rated as "more attractive" if they have more differences in their MHC genes.
It is thought that this would result in healthier offspring by discouraging inbreeding, see http://en.wikipedia.org/wiki/Major_histocompatibility_complex#MHC_in_sexual_mate_selection

Endangered Species have a smaller set of MHC variants in their population, and so are more susceptible to being wiped out by disease.
MHC also plays a major part in recognising and destroying transplanted tissues.