How this is arranged depends on the company (e.g. large corporations tend towards lots of paperwork) but they all demand a reasonable amount of notice (i.e. more notice for longer vacation periods) as well as some awareness of deadlines and upcoming work.
Different companies do have different policies though. For example, that employees use their vacation time within a certain period or lose it. And yes, some have certain times that are set vacations. My company shuts down between Christmas and New Year, and the non-public holidays count as annual leave.
In the last six months I have: taken Monday/Friday leave to visit family for an extra long weekend, a two week break to do a course (latin :), and a morning in the middle of the week (with no notice) to wait for a delivery.
For contrast: a "casual" job has no paid leave. I believe it is also much easier legally for employers to fire casual employees.