I have been going over the 7th Perek of Bava Metzia and the topic of עין הרע comes up. I believe that this is a very misunderstood concept and would therefore like to share some of the more common interpretations.
1. The Maharal writes that it is a power given to people that with their eyes they can actually cause damage. The Chazon Ish also goes with this approach. He writes that is מסודות הבריאה that people can cause damage by looking at things. However, he makes a very important point. He says that עין הרע only affects someone who was supposed to be damaged. There already was a דין in שמים for them to be damaged, the only question is how. One of those ways is עין הרע. He does point out that עין הרע can put a person in danger and when a person is in danger sometimes his דין is reevaluated. This is why עין הרע is something that people try to stay away from even though it has no independent power to harm them. The Gemara in ב"מ פ"ד quotes R' Yochanan as saying that עין הרע does not affect the descendants of יוסף. According to the Chazon Ish and the Maharal it is some kind of real protection from the actual damage that the eyes do. The descendants of Yosef would seem to be based on lineage, they have special protection based on the Beracha given to Yosef.
2. R' Dessler explains that עין הרע works as follows. When a person (Reuven) flaunts what he has, he causes pain to others by making them feel that they lack something. This pain is what causes Reuven to be punished. He is punished for causing others to envy him and feel bad. He then explains why עין הרע does not affect the descendants of יוסף. Someone who lives only for others and always gives and never takes does not arouse envy and therefore is protected from עין הרע. This is what Yosef represents. The Gemara has a different derasha which learns it out from fish. Fish are hidden from the eye under water and don't compete with people on land. Therefore they don't cause envy. According to R' Dessler when the Gemara says that עין הרע doesn't affect the descendants of Yosef, it is not referring to his actual descendants but rather to those who follow his path.
Tosafos (ב"מ ק"ז) clearly argues on this as the Gemara states in the name of Rav that most people buried in the cemetery died because of עין הרע. Tosafos asks how could that be, what happened to the בני יוסף who are protected from עין הרע? It is clear from Tosafos's question that they are referring to the literal descendants of Yosef.
These are 2 very different views of עין הרע. The Chazon Ish and the Maharal take a supernatural view and attribute power to the eye to actually cause damage. Similaryly the protection is supernatural and is based solely on lineage. R' Dessler on the other hand takes a rational, ethical view nothing to do with the supernatural. עיו הרע is all about a person and his desires. The protection is based on a person's own actions, any person can be protected from עין הרע if they act like Yosef.