Tabata intervals are a great tool for fat loss. Tabata intervals are a specific High Intensity Interval Training (HIIT)) protocol defined by, as you mentioned, 20 seconds of very high intensity exercise followed by 10 seconds of rest.
Although many forms of HIIT are very effective, Tabata intervals specifically have been shown to be the most effective.
I've been doing Tabata HIIT for a while now, and have found it to be really great for losing fat as well as improving your cardiovascular fitness and muscle endurance. Whether performed with resistance training (weights) or with cardio, the benefit of HIIT is that it significantly boosts your metabolism for up to 48 hours after the workout is complete. Compared to traditional cardio exercises where you stop burning calories as soon as you stop exercising.
Since a round of Tabata intervals only takes 4 minutes, they're super easy to add into a normal workout. The catch here though is that typically, if you do them first, you won't want to do any other exercise afterwards. And if you save them for the end of a workout, they won't be as effective as if you did them first. Here's why:
All HIIT (Tabata included) are based on the premise that you are literally going as hard as you can for 20 seconds, then resting for 10 seconds. If you're already tired from another workout you just did, you're most likely not going to be giving your Tabatas your full effort.. and you really want to give your Tabatas your full effort if you want the greatest results from them.
An easy way for me to tell if I've done my Tabatas correctly is whether or not I want to do any other workout after I'm done. If I did them correctly, the answer is almost always no.. doing the intervals just takes too much out of me.
As far as what exercises you do with Tabatas, that is up to your personal preferences, ability and access to equipment. I've done Tabata intervals with:
Sprints (most effective IMO)
8 Count Body builders (like burpees)
or Some combination of the above
Typically, I like to do my HIIT on a separate day, in place of one of my other workouts. The type of Tabata I'm doing will depend on whether I replace a cardio day or a weights day. I prefer to replace a cardio day, but sometimes will replace a weights day. I usually only do Tabatas twice a week. After about 12 weeks I'll take 2 or 3 weeks off from using them.. as my body tends to adapt to them over time and they become less effective.
When you start off, you're best doing just one Tabata interval. If you have never done HIIT, and are able to do back to back 4 minute tabatas, you're probably not going hard enough the first time. Once you are doing good with the first interval, you can start adding in additional intervals. Here is how a sample progression might look:
Week 1: (1 @ 4 min) twice this week
Week 2: (1 @ 4 min) twice this week
Week 3: (2 @ 4 min .. rest 3-5 min in between) twice this week
Week 4: (2 @ 4 min .. rest 3-5 min in between) twice this week
Week 5: (2 @ 4 min .. rest 3-5 min in between) twice this week
Week 6: (3 @ 4 min .. rest 3-5 min in between) twice this week
Week 7: (3 @ 4 min .. rest 3-5 min in between) twice this week
etc. Typically I don't do more than 3 or 4 Tabata intervals in any workout
I'll usually space them about 3-4 days apart.
You'll want to get an audible timer that tells you when to go and when to stop. Some websites have mp3s you can download for free and put on your ipod to keep track of the time for you.. and there are numerous apps for intervals on iPhone and Android.
I like to download the mp3s and use an audio mixer to overlay them on my favorite workout songs.. that way I can use my normal workout music and still be able to hear the timers going off!
Hope this helps!