To be honest it is all on wiki mate but this is the crux of it:
Participation
The ***-Pokal begins with a round of 64 teams. The 36 teams of the Bundesliga and 2. Bundesliga, along with the top four finishers of the 3. Liga are automatically qualified for the tournament. Of the remaining slots 21 are given to the cup winners of the regional football associations, the Verbandspokale. The three remaining slots are given to the three regional associations with the most men's teams. They may assign the slot as they see fit but usually give it to the runner-up in the association cup.
As every team taking part in the German football league system is entitled to participate in local tournaments which qualify for the association cups, every team can, in principle, compete in the ***-Pokal. The only exception is that reserve teams (e.g. Bayern Munich II) are ineligible to enter.
Seeding
For the first round, the 64 teams are split into two pots of 32. One pot contains the 18 teams from the previous season of the Bundesliga and the top 14 teams from the previous season of the 2. Bundesliga. The other pot contains the bottom 4 teams from the previous season of the 2. Bundesliga, the top 4 teams from the previous season of the 3. Liga and the 24 amateur teams that qualified through regional football tournaments. Teams from one pot are drawn against teams from the other pot. Since 1982, teams from the pot containing amateur teams have played the game at home.
For the second round, the teams are again divided into two pots according to the same principles. Depending on the results of the first round, the pots might not be equal in terms of number. Teams from one pot are drawn against teams from the other pot until one pot is empty. The remaining teams are then drawn against each other with the team first drawn playing the game at home.
For the remaining rounds, other than the final, the teams are drawn from one pot. Since 1985 the final has been held in the Olympic Stadium in Berlin.
-------------------------------------------------------------------------------
I guess the big difference to say the FA Cup is there are only 64 teams in it, so less teams are in it but that does make the local County Cups much more interesting I would say as more interest will be in them from support and locals if Clubs know if they win it then they will have a home tie more than likely against a big Club in the 1st round of the Pokal. Of course some States always have the same representative now mind - Hansa Rostock will have represented Mecklenburg Vorpommern for years now as a result of winning their County Cup.
en.wikipedia.org
Some decent attendances for the Finals really, given many are amateur Clubs.