Peers

The peerage traces its roots back to a time when its members were "peers" of the monarch and as such were expected to be companions and advisors to the king. It is this advisory role that eventually evolved into the Houses of Parliament.  Peers sit in the House of Lords and are ineligible to sit in the House of Commons.  Children of peers, however, are commoners, despite the use of courtesy titles based on their father's rank.   The following is a guide to the aristocracy from the top down.

Dukes

The title of Duke dates back to the the 1300s and is now limited to the members of the royal family.  A number of dukedoms have always been limited to the royal family, including Gloucester, Kent, Sussex, Edinburgh, Clarence, and York. Prince Andrew is formally known as the Duke of York.  As noted in the previous page, his previous title of prince was merely a courtesy.  On the morning of his wedding day, the Queen elevated him to the peerage by conferring the upon him the titles of Duke of York, Earl of Inverness, and Baron Killyleagh.   Peers always are referred to by their most senior title and confer that title to their wives upon marriage, which is why Sarah has always been known as Sarah, Duchess of York.   Had the Queen not conferred that title on her son, Sarah's official title would have been the Princess Andrew.  Prince Edward has not been granted a dukedom, although one might suspect that he will be granted one should he ever marry. The dukedom of Norfolk has long been the most prestigious ducal title.

Title of Address: Your Grace, although in the case of royal dukes, such as Andrew, the correct address is Your Royal Highness.  The HRH designation was stripped from Sarah when she and Andrew divorced. Nonroyal dukes are known as John Doe, Duke of "Some Place" (for example, Norfolk or Buckingham). Often in historical writings, a duke is referred to simply by the location of their dukedom.
Wife: Duchess of "Some Place"; Lady Some Place.  A signature would read First Name, Some Place (for example, Sarah York)
Children:  Lord or Lady followed by their given name and then the surname.  The Duke of York's children, however, are an exception insofar as they are the grandchildren of a monarch.  Hence they are known as Princess Beatrice and Princess Eugenie of York.   The oldest son of a duke often takes the father's second title; thus a son of Andrew's might have been known as the Earl of Inverness.  The grandson of a duke normally was known by his grandfather's third title.   Children, excepting the eldest son, sign with the family name (for example, the daughter of the Duke of Kent would sign Rose Windsor)

Marquess

This title dates back to 1385.  It is the rank to which Henry VIII advanced Anne Boleyn in her own right (that is, she was granted a title that was not dependent on her father's title nor on a husband's) before he married her.  Her title was also granted with the privilege that it would descend to her male heirs. The most prestigious marquess title is that of Marquess of Winchester

Title of Address: My Lord; Marquess of "Some Place."  "The Most Honourable" Anne Boleyn became Marchioness of Pembroke.
Wife: Marchioness of Some Place; Lady Some Place; A signature would read First Name, Some Place
Children: Lord or Lady followed by their given name and then the surname.  Once again, the eldest sons might take their father's secondary title.   Signatures follow the same rules as duke's children.

Earl

Earls originated in Anglo-Saxon times when an earl was a local ruler. The oldest official earldom is the Arundel, which dates to 1433. The most significant earldom in England is the Shrewsbury title.

Title of Address: My Lord; Earl Surname, as in Earl Spencer (Diana's brother).
Wife: Countess Surname, as in Countess Spencer
Children: The eldest son generally take their father's secondary title.  Princess Margaret's son, for example is Viscount Linley until his father dies when he will become Earl Snowdon.  Younger sons are styled "Honourable" and daughters are called Lady followed by their given name and their family name as in Lady Diana Spencer or Lady Sarah Armstrong-Jones (Princess Margaret's daughter).

Viscount

This title was often used to reward service to the crown that warranted more recognition than a barony. The most senior Viscount in England in Hereford.

Title of Address: My Lord; Viscount Surname
Wife: Viscountess Surname
Children: Eldest sons do not customarily take a father's second title. Instead, all children are styled "Honourable"

Baron

Baron is the oldest peerage titles; the premier barony of de Ros was created in 1264. Since the 1960s, few hereditary peerages have been created.  Instead, the Queen usually confers life peerages, usually at the rank of Baron. These life peerages are not inherited by children.  Life peerages were created in 1958 and carry with them the right to sit in the House of Lords. Life peers are known by their full name, given at birth, followed by Baron of "Some Place."  For example, Margaret Thatcher, Baroness of Kestevan.
Title of Address: My Lord
Wife: Baroness
Children: Insofar as this is the lowest of the titles, there cannot be a secondary title for an eldest son to adopt. All children are styled "Honourable"

OTHER TITLES

Baronets

Baronets first appeared during the reign of James I.  They are not peers but rather are knights. James recruited Baronets from old untitled landed families and the minimum requirement for eligibility was the possession of an estate to the value of £1,000. The title is hereditary and was invented as a means to raise money and to encourage the settlement of Ulster and Nova Scotia.  Individuals who rank at the level of Baronet or below cannot sit in the House of Lords.  No baronets have been created since 1964.

Title of Address:  Sir;  Sir John Doe, Baronet.

Knights

Knights, like baronets, are not peers.  Originally a knighthood was the eventual reward for reaching a certain level of military service pr for accumulating enough wealth to warrant recognition but not a peerage.  Now, however, knighthoods are awarded for general service to the state. There are several categories of knights.  Ordinary knights are known as Bachelor Knights.  Others become knights by becoming members of one of nine chivalrous orders

Chivalrous Order Knights

Order of the Garter: the highest honor that can be conferred on a British subject.; limited to 25, excluding royal members.
Order of the Thistle: Scotland's highest order; limited to 16.
Order of St. Patrick: Ireland's highest order; limited to 22.
Order of the Bath: primarily a military order
Order of the Star of India: awarded for service overseas or foreign affairs
Order of the Indian Empire: awarded for service overseas or foreign affairs
Order of St. Michael and St. George: awarded for service overseas or foreign affairs
Order of the Royal Victorian: awarded for service to the monarch
Order of the British Empire

The last six categories of knighthood are further subdivided by hierarchy within themselves.  The highest class of knighthood is to be a Knight of the Grand Cross followed by Knight Commanders and then Companions.  Once below the level of Knight Commander, one is merely a member of the order and is not also a knight.

The final two orders (Royal Victorian and British Empire), have further levels.  Beneath Companion, the Royal Victorian has two further levels of Members.  The British Empire has Officers and Members beneath the level of Companion.  The Order of the British Empire is most frequently awarded.
Title of Address:  Knight Bachelors are addressed as Sir; Sir John Doe, Knight Chivalrous Order Knights are known as Sir John Doe,  followed by the initials of their order; for example, Sir John Doe, KG (Knight of the Garter). Members of orders who are not knights are known by their name and the initials of their order as in John Doe, CMG (Commander of St. Michael and St. George). Females who are granted knighthoods follow the same rules except that they are referred to as Dames rather than knights.
Wives: Lady Surname.  Note that wives of knights can be distinguished from wives and daughters of peers insofar as the latter are also addressed by their first name, as in Lady Diana Spencer not Lady Spencer.
Children: no courtesy titles.
 

Information on this page is partially garnered from Webb RK: Modern England, edition 2.