So, what is whiskey? It is plainly a spirit distilled mostly from fermented grain. That's the only rule, grain: wheat, rye, corn etc. Vodka distilled from 51% grain is also a whiskey, but vodka distilled from 51% anything else is not. The difference between a grain vodka and whiskey is in the goal. With whiskey you want some flavor to carry over in the distillation process, with vodka you want it as pure and clear as possible. This is why clear distilled corn alcohol can be called "Whiskey" in a Moonshine bottle and "Vodka" in a Deep Eddy bottle.
So what's Scotch? Scotch is whiskey made in Scotland! What makes Scotch special is that the grains are toasted with peat. Peat (just like peat moss you buy at the home and garden store) was the primary fuel in Scotland for a long time. It was free, abundant and renewable so it's what they used for heat. The peat is what imparts that special smoky sour flavor (or horse poo to some) that sets Scotch in a class by it's own.
What so special about Irish Whiskey? Irish pride! The Irish have long loved drinking and making whiskey. Their rules closely mirror Scotlands, but rarely use peat to toast the grains, so Irish tends to be more mellow in flavor.
How about Canadian Whiskey? With rules similar to Ireland, Canada makes a lot of good, smooth whiskeys. The exception being that Canadian Whiskey is allowed to include flavors and coloring agents to improve marketability (like crushed beetles or beaver pee), yet still retain the label of "Canadian Whiskey". Scotland and Ireland only allow the whiskey, water and caramel color (specifically E151) to go in the bottle if it bares the label "Scotch Whiskey" or "Irish Whiskey".
Tell us about American Whiskey! American whiskey has the most convoluted, yet least restrictive, regulations of all the major whiskey producing countries. To be American Whiskey, it has to be made from 51% grain in the United States. No rules on aging (at all)or what that other 49% can be (anything!)or EVEN WHERE IT'S BOTTLED. American Whiskey is legally allowed to be garbage. I'm not calling American Honey or Red Stag garbage, but I also have a tough time calling them "whiskey". BUT there is hope! If the label says anything MORE than "American Whiskey", the rules compound exponentially!
The most "American" Whiskey is "Straight Bourbon". Straight Bourbon must be made in the US of a mash that is at least 51% corn, age for 2 years in new charred oak barrels, contain NO added colors or flavors (not even caramel color like Scotland and Ireland) and can't be mixed with any other spirit. It comes out of the barrel, is mixed with additional water to bring the % AVB down to the target, and put in a bottle. Just "bourbon" without the "straight" is barely more stringent than "whiskey". Basically, if you take any American whiskey and pour it through a barrel it qualifies as "bourbon".
Kentucky Straight Bourbon has even more rules. The main appeal of Kentucky Straight Bourbon is the water. The whole state is sitting on top of limestone that naturally filters the iron out of the water which made the water perfect for distilling spirits. Since these distilleries have been making straight bourbon for so long, they're pretty good at making really good bourbon in large quantities, so the fact that it may be cheap doesn't mean it's not good, high quality whiskey!
Other fun rules for all bourbons. If it's aged less than 4 years it has to have an age statement on the label. "Bonded" whiskey is aged in a government bonded warehouse. Where the barrels are in the stack effects the strength and flavor, as the higher they are, the less stable the temperature. "Cask Strength" means it's bottled right out of the barrel and not diluted with water. The "Angels share" is what evaporates through the barrel, the "Devils cut" is the sludge left in an emptied barrel (Jim Beam is apparently squeezing this stuff out and selling it now). American "Rye Whiskey" has the same rules as "Straight Bourbon" with the exception that it must be made from 51% rye instead of 51%corn. "Tennessee Whiskey" has the same requirements as "Straight Bourbon", with the added stipulation that it be made in Tennessee, AND no new distilleries can use the title unless they use a state mandated filtering process.
"Sour Mash", is the same as sourdough. A part of the mash from the last batch is used to start the next batch. This provides some consistency in flavor.
"Single barrel" means the whiskey in the bottle came out of a single barrel, it has nothing to do with the aging. You know what I said about the barrels position in the stack? If you want consistent flavor it makes sense to mix all the barrels in the stack together before bottling. Single barrel is less consistent, but has more character.
"Rye Whiskey" has a completely different flavor, usually described as "spicy". But don't think "peppers" spicy, more like caraway seed spicy (those tiny watermelon looking seeds in the sausage on your pizza). A lot of friends who developed a taste for rye have lost their taste for everything else, so watch your step!
"Blended" isn't a bad thing. If you have a whole batch of whiskey that tastes like charcoal, and another distillery has a whole batch that's clear as water, there's nothing wrong with mixing them to make two batches of perfectly drinkable whiskey. Many blended whiskeys are done so on purpose (like Johnnie Walker), where they constantly change the blend in order to keep the flavor as consistent as possible throughout the years (how would you like to have that job? Taste 50 year old scotch and then 3 year old scotch, blend and repeat! I'm pretty sure sipping whiskey professionally could only be done by a Scotsman!).
Now for etiquette. You can drink whiskey any way you like, just like you can take a shotgun to the grocery store or you can ride you bike center-lane during rush hour. It's not illegal and may not even be wrong, but regardless of your reasons people probably think you're a jerk.
Putting water in your whiskey only offends the ignorant. Whiskey is mixed with water before it goes in the cask, and it's mixed again before it goes in the bottle. A little bit more when it goes in the glass is purely a personal preference, you're still drinking the same amount of the same whiskey.
Don't slam shots! If you do, you're probably drinking for the wrong reasons and should take a moment to evaluate your situation. Even the smallest pour of whiskey is meant to be at least two sips. One sip adjusts your tastebuds and the second is to experience the whiskey.
Mix whiskey on a case by case basis. Use YOUR whiskey in any mixer you like! If you put Pappy Van Winkle in your cocacola, good for you! You have exquisite taste and the highest standards! How you drink OTHER people's whiskey does involve some etiquette. If someone OFFERS you whiskey by name (regardless of the name), you take it how they pour it or respectfully decline before they pour it. Same thing if offered from a decanter.
Example: "Would you like some Jim Beam Rye?", "Yes! Yes I would." They hand you Jim Beam Rye warmed to 150*F in a bronzed baby shoe and you drink it like a gentleman (at least two sips!).
Example: "Would you like a whiskey n' coke?", "sure" if you want a whiskey n' coke but "Yes! But with two rocks and no coke, please!" is also acceptable. They've already offered mixed, so neat is less work for them. If the offerer then pours Old Crow from a plastic gallon jug into a proper whiskey glass with two rocks OR they pour Booker's into an oversized red Solo cup with a popsicle in it, you drink it like a gentleman (after discretely tossing the popsicle)!
(Old Crow is actually a really decent straight bourbon, a series of unfortunate events led to a decline in the price and reputation, but not the quality of the whiskey).
Example: You're at a reception after a VERY long and VERY boring full-blown Catholic wedding with all the sit-stand-kneel that entails. Coors Light, box wine, and the full gambit of Big K soda's are all the libations available. Except the super cool, good looking, FSJ driving guy in Tony Lama's seated at the same table as you offers to share some of his Wild Turkey 101. DON'T MIX IT WITH MOUNTAIN K SODA.
In closing this post I want to share a small bit of obscure American Whiskey history, the decanter.
The Foundation of this country is the honest belief that all are created equal. The first breath of our nation was to cry out that we would not be ruled by another's "right of birth". From the Emancipation Proclamation to Women's Suffrage we've sauntered on smashing social boundaries and continue to do so to this day. That's the reason for the Whiskey Decanter, a purely American device that came to rise during prohibition. Whiskey doesn't need to decant and it doesn't need to breath before being put in a glass. All a whiskey decanter does, is remove the label from the whiskey so that a rich man and a poor man could drink whiskey together.
Those of us (myself included) who believe they have a developed whiskey pallet, and have whiskey they like and whiskey they don't, have to admit that even bad whiskey tastes good in the right company. If you ever want to let someone know that you respect them, get them a whiskey decanter. If anyone ever gives you one, you know what they think of you, too.
EDIT to emphasize "Straight" bourbon over just bourbon, to include a note on rye whiskey, and to explain that etiquette applies to drinking other peoples whiskey.