Several LDS folks have already reviewed or mentioned Van Dam's brilliant tome. The most detail is in Kerry Shirts' review. FARMS discusses a few parts of Van Dam's work in "Teraphim and the Urim and Thummim" by Matthew Roper. I'll share a couple highlights I've picked up so far.
Van Dam begins by noting that scholarship on the Urim and Thummim had become rather silent since a sort of consensus had been reached that the Urim and Thummim was probably lots (e.g., systems such as two or more sticks that could be randomly selected to reveal a yes/no answer), which I notice is the primary view advocated in the Wikipedia entry on Urim and Thummim. Surprisingly, Van Dam is not even cited on Wikipedia (as viewed Aug. 9, 2008).
Van Dam humbly observes that there is yet more to add to the discussions of the past, and then offers a mountain of new insights about this mysterious device used by ancient priests in Israel. He begins with a survey of past commentary and scholarship, which tends to argue that the device was primarily allegorical or symbolic, not a means of revelation. From medieval days on, "the preponderance of allegorical exposition meant that there was often very little attention given to the exact (physical) identity of the UT" (p. 12). Though allegorical interpretations of scripture generally fell out of favor with the Reformation, the Urim and Thummim continued to be viewed largely as symbolic. "Between the seventeenth and the twentieth centuries, a significant number of scholar continued to regard the UT, not as a specific means of revelation, but as a symbol. Usually the UT were considered symbolic of the presence of God and/or the illumination and veracity of the revelation (which was considered to have been given through inspiration to the high priest)" (p. 14).
Some sources, though, treated the Urim and Thummim as real physical objects. A very old tradition equated it with stones on the breastplate or ephod of ancient Israelite priests. Van Dam observes, however, that an "obvious advantage of considering the UT to be one or two gems that were distinguished from the breastpiece is that justice is done to the differentiation made between the two in Exod 28:30 and Lev 8:8" (p. 29).
Van Dam cites documents from the Dead Sea Scrolls which link the Urim and Thummim to stones that give light. One document, 4Q375, has text with the following translation:
for the UrimVan Dam states that this is a reference to "the flashing of the two engraved stones on the shoulderpieces of the ephod of the high priest" (p. 17). Some writers between the seveneteenth and nineteenth centuries held that the Urim and Thummim were the twelve gems on the breastplate of the priest, and that prophetic inspiration was the mode of revelation.
[... the stone when ...]
they shall give light to the and he/it (i.e., 'the priest' or 'the cloud') shall go forth together with it(?) with flashes of fire, then the left hand stone which is on the his left hand
side shall shine forth to the eyes of all the assembly until the priest finishes speaking....
Van Dam ably argues against the lot theory, advocating instead that the Urim and Thummim was associated with prophecy and revelation more generally, not merely using lots to get yes/no answers or to choose between two or more possibilities. If he is correct, "then we are bringing together two elements that generally have been carefully separated in biblical scholarship, namely, priesthood and prophecy. This separation, begun in the early nineteenth century, has been characteristic of the last hundred years or so, precisely when the lot theory was in vogue."
Van Dam discusses traditions in the Babylonian Talmud in which revelation was received through the Urim and Thummim (here identified with the gems of the high-priestly breastpiece) via letters engraved on the stones. "One tradition thought the letters that formed the reply stood out while the priest presumably made up the right combination, whereas the other argued that the letters combined for form the words of the response" (p. 20).
The concept of the Urim and Thummim providing revelation associated with visible light and particular with written text is one of much interest to Latter-day Saints. This concept is linked to the ancient tradition that the Urim and Thummim were engraved with the divine Name. The earliest reference to this, according to Van Dam (p. 23), is Targum Pseudo Jonathan on Exodus 28:30:
And you shall put into the breastplate the Urim, which illuminate their words and make manifest the hidden things of the House of Israeal, and the Tumim [sic] which perfect their deeds, for te High Priest who seeks instruction from the Lord through them. Because in them is engraved and exposed the great and holy Name by which the three hundred and ten worlds were created....Bede also speculated that the Urim and Thummim may have been "simply placed with a secret name" on the breastpiece. Rabbi Moshe ben Nahman (1194-ca. 1270) said that the Urim and Thummim had an inscription of the holy names of God and were given by God to Moses. Van Dam explains the operation, according to ben Nahman (p. 24):
[W]hen the priest fixed his thoughts on the divine names in the Urim, some letters engraved upon the stones of the breastpiece would light up before the eyes of the priest who inquired of their judgment. Not yet knowing he correct arrangement of the letters to form the response, the priest would fix his thought on the divine names in the Thummim, and his heart was made perfect so that he could understand the meaning of the letters that had lit up.This sounds somewhat similar to Doctrine and Covenants Section 9, where we learn that the divine gift of translating the Book of Mormon required more than simply looking into the Urim and Thummim, but serious mental effort to understand, receiving revelation through heart and mind. And of course, this process required the mortal to be pure and close to God.
Van Dam makes particular note of the associations of the Urim and Thummim with light (e.g., pp. 132-139), noting that the words may well mean something like "light and perfection" or even "perfect light" (p. 224). Various ancient sources refer to light emanating from the Urim and Thummim as playing a key role in the revelatory process. Van Dam finds evidence suggesting the theory (admittedly speculative, according to Van Dam) that the Urim and Thummim might have been a gemstone (pp. 224-226), perhaps just a single object, though it may have been more than one object.
Recognizing the strong associations between the Urim and Thummim and revelatory light and truth, Van Dam suggests that some biblical passages that mention light and truth may implicitly be references to the Urim and Thummim (pp. 225-226).
He also points that the rise of rationalism since the 17th century led to the falling out of favor of the theory that supernatural light was involved in its use.
Van Dam's exposition will be of interest to students of LDS religion, for Joseph Smith's references to the Urim and Thummim are strongly supported by scholarship on the ancient understanding of these tools. Joseph Smith taught that these were divine tools which provided light that allowed one to see things as part of the revelatory experience. The Urim and Thummim could help him translate text, receive revelations and answers to questions. It involved a stone or stones which could provide revelatory light. And references in the LDS scriptures to seer stones, Gazelem, the glowing stones in Ether 3, and the Urim and Thummim that the saints will receive in the Celestial Kingdom all appear to fit surprisingly well in the context of modern scholarship about ancient biblical views on the mysterious Urim and Thummim. Not bad for young Joseph Smith if he were making all this up at a time when it would have been safer to not mention the Urim and Thummim at all or treat them as allegorical. But, yes, he could have theoretically obtained information from several sources suggesting that they were stones or jewels. One source is Josephus. There was also a sermon given in New York in 1800 by John Stafford on the Urim and Thummim teaching that they were two jewels (you can read this at Google Books: "The Urim and Thummim," delivered before Hiram Lodge, No. 72, Dec. 27, 1800, New York: E. Conrad, 1820.
There is much more to say on this topic, but that will suffice for now. I hope you'll read the book yourself.