A synopsis is probably the only place you can get away with telling. It's a summary of the major events of your book, written in present tense (except for any necessary bits of backstory), and as if you are telling us the story. There are many fine examples of synopses out there on the Internet, so I won't waste time illustrating one here. We'll just cover the important points.
A synopsis helps your agent/editor determine whether he or she is interested in seeing more of your work. The format for a synopsis is the same as that for your manuscript, unless otherwise indicated by the agent or editor requesting your work. The only exception is that you would put "STORY TITLE / Your Name / Synopsis" in the header, and the page numbers on the right as usual.
The most important part of a synopsis is the hook, or the opening line, which should be an attention-grabber. If you can't grab the agent/editor's attention at Page One, she may not finish reading it, no matter how exciting you think Page Eight is, if she'd just read a little further. Keep the synopsis streamlined and engaging, and especially proofread it. Even though it's a summary of your story, it's still an example of how well you write. Pacing is just as important, if not more so, in a synopsis as it is in your manuscript. The agent or editor is looking for a well-told book that flows smoothly, without contrived events. Don't muddy up your pacing with minor events. We're looking for major turning points. In romance, we also want to see internal and external conflict, sexual or romantic tension between your hero/heroine, the black moment, and a happy ending. (More on those things in later blog entries.) You don't need dialogue in a synopsis - save it for your manuscript. Remember, this is the one case where you are telling the story, and your characters aren't.
A synopsis is a selling tool. While it should never sensationalize your work (think of those obnoxious commercials with shouting vendors and colored text flashing across the T.V. screen), it should market your story in its best possible light. Think of the most engaging personality traits of your characters, and the unexpected twists and turns in your plot. Make sure you include those.
I usually write a one-page, a five-page, and a ten-page version of each manuscript's synopsis. This makes it much easier, come submission time, when different agents and editors request different-length synopses. Some are just looking for how well you tell a story, and whether its plot might be of mass interest. Others want to know more detail. Let a critique partner read through your synopsis. Sometimes, she'll pick out a minor plot point that doesn't need to be there, or a major one that you've left out. Because she's impartial (compared to you), she might even help you find a more interesting way to sum up your story's events. The more engaging your synopsis, the better chance you'll have of getting your manuscript read. And that's one step closer to publication.