Third year generally consists of five two-month rotations in surgery, obstetrics and gynecology, pediatrics, internal medicine, and psychiatry. The other two months are electives, research, or vacation. These are generally graded Honors, Pass, and Fail with maybe a few more distinctions thrown in (ie High Pass). The level of hands on experience depends on the hospital. Some prestigious well-staffed hospitals might just let you watch, but others will need all hands on deck.
For example, in surgery you'll likely be a "human retractor." You get to hold organs and body fat out of the way so the true surgeons can go to work while you get quizzed on anatomy. You might get to stitch some things up too, but your knots will either be too short or too long, but never perfect. Every fourth night you might be on call with the interns, answering nurses pages and checking on wounds. You might admit patients, take brief histories, and perform exams. Despite missing out on sleep, you'll spend a lot of time reading surgical texts to pass shelf exams at the end and to look good when "pimped" or quizzed by residents.
IM is also pretty intense. Medical problems in adults can be pretty complex and generally occur in tandem with one another. You usually round very early in the morning, charting patient progress, checking vital signs, tweaking prescriptions and IVs, and making sure they'll survive the day. You then round with the intern, then the residents, then the attending. You'll get grilled over disease trivia, why you did what, what you can change, and then be left to work the remainder of the afternoon. You'll likely be a scut monkey, helping the intern fetch lab values and performing minor procedures. You'll probably get the unpleasant task of dealing with the less medical side of things like placing patients in nursing homes, contacting social workers, and tracking down patient family members. You might have call like when on surgery or you might get to go home for the day when all the loose ends are tied up.
Those are the two "specialties" I've heard about the most and have actually observed med students in. Fourth year is generally devoted more to electives in other specialties in which you are interested with some "free" time thrown in to interview for match day. Regardless of the year though, the key to success is to be like a swan, serene and calm on the exterior, but paddling like mad underwater.
However, I'm only applying this year so I freely admit I might not be the best person to reply.