It is surprising to me how many people assume that 'On Liberty' was written before or during the American Revolution - Mill was certainly influenced by the spirit of American liberty, which was variously romanticised and adapted in Britain and Europe during the nineteenth century. Published in 1859, 'On Liberty' is one of the primary political texts of the nineteenth century; perhaps only the writings of Marx had a similar impact, and of the two, in today's world, Mill's philosophy seems (please note that I only said 'seems') the one that is triumphant.
One of the interesting ideas behind 'On Liberty' is that this may in fact be more the inspiration of Harriet Taylor (later Mrs. J.S. Mill) than of Mill himself; Taylor wrote an essay on Toleration, most likely in 1832, but it remained unpublished until after her death. F.A. Hayek (free-market economist and philosopher) noticed this connection. Whether this was the direct inspiration or not, the principles are similar, and the Mills were rather united in their views about liberty.
'On Liberty' is more of an extended essay than a book - it isn't very long. It relates as a political piece to his general Utilitarianism and political reform ideology. A laissez faire capitalist in political economy, his writing has been described as 'improved Adam Smith' and 'popularised Ricardo'. Perhaps it is in part the brevity of 'On Liberty' that gives it an enduring quality.
There are five primary sections to the text. The introduction sets the stage philosophically and historically. He equates the histories of classical civilisations (Greece and Rome) with his contemporary England, stating that the struggle between liberty and authority is ever present and a primary feature of society. He does not hold with unbridled or unfettered democracy, either (contrary to some popular readings of his text) - he warns that the tyranny of the majority can be just as dangerous and damaging toward a society as any individual or oligarchic despotism. Mill looks for a liberty that permits individualism; thus, while democracy is an important feature for Mill, there must be a system of checks and balances that ensures individual liberties over and against this kind of system. All of these elements receive further development in subsequent sections.
The second section of the text is 'Of the Liberty of Thought and Discussion'. Freedom of speech and expression is an important aspect here. Mill presents a somewhat radical proposition that even should the government and the people be in complete agreement with regard to coercive action, it would still be an illegitimate power. This is an important consideration in today's world, as governments and people contemplate the curtailment of civil liberties in favour of increased security needs. The possibility of fallibility, according to Mill, makes the power illegitimate, and (again according to Mill) it doesn't matter if it affects many or only a few, people today or posterity. It is still wrong. Mill develops this argument largely by using the history of religious ideas and religious institutions, in addition to the political (since the two were so often inter-related).
The third section is perhaps the best known and most quoted, 'Of Individuality, as One of the Elements of Well-Being'. It is perhaps a natural consequence of Enlightenment thinking that individuality over communal and corporate identity would dominate. Our world today goes back and forth between individual and communal identities (nationality, regionality, employment, church affiliation, school affiliation, sports teams, etc.). Mill's ideas of individual are very modern, quite at home with the ideas of modern political and civil individuality, with all of the responsibilities.
Mill states, 'No one pretends that actions should be as free as opinions.' He recognises the increased limitations on individual liberty given that we do live in communal settings, but this does not hinder the idea of individuality and individual liberty, particularly as it pertains to thoughts and speech. Mill explores various ideas of personal identity and action (medieval, Calvinist, etc.) to come up with an idea of individuality that is rather modern; of course, this is political personhood that pre-dates the advent of psychology/psychoanalytic theory that will give rise to a lot more confusion for the role of identity and personhood in society.
The fourth primary section looks theoretically at the individual in community, 'Of the Limits to the Authority of Society Over the Individual'; the final section looks at specific applications. Mill discounts the idea of social contract while maintain that there is a mutual responsibility between individuals and community. Mill looks at the Temperance movements and laws as an example of bad laws (not only from the aspect of curtailment of liberty, but also for impractical aspects of enforcement); in similar examples, Mill looks at the role of society in regulating the life of the individual, calling on good government to always err on the side of the individual.
Mill puts it very directly -- Individuals are accountable only to themselves, unless their actions concern the interests of society at large. Few in the Western world would argue with this today; however, we still live in a world where 'thought police' are feared, and 'political correctness' is debated as appropriate or not with regard to individual liberties.
Mill wrote extensively beyond this text, in areas of philosophy (logic, religion, ethics). The particular text here includes other essays of interest: 'Utilitarianism', 'Considerations on Representative Government', and 'The Subjection of Women', and also has a useful bibliography and index. The essay on Utilitarianism is one of the more contentious works of Mill; the later two contain ideas well ahead of their time, and many parts can be seen at work in modern democracies.
This should probably be required reading in civics classes, if not in the pre-university years for students, then certainly in the early university years.