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Rolf's references cover GRE very well.
Just wanted to emphasis, some of the "optional" settings can be advantageous. First, I like using "keepalive 1". This insures tunnels goes "down" if reachability is lost to other side. This is handy even on links where you're running a dynamic routing protocol if you're also running SNMP monitoring, as the latter usually "alarms" well when an interface goes down and perhaps not so well when a routing protocol loses a neighbor.
Using mss-adjust (if supported) and the correct MTU related commands helps deal with fragmentation issues which often are adverse to performance. Do, though, keep in mind, IP/TCP overhead can be larger than 40 bytes, so setting mss-adjust to 1436 isn't a guarantee of success even with end-to-end Ethernet supporting 1500 MTU.
