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Tefillin are two small black boxes with black straps attached to them; Jewish men are required to place one box on their head and tie the other one on their arm each weekday morning. Tefillin are biblical in origin, and are commanded within the context of several laws outlining a Jew's relationship to God. "And you shall love the Lord your God with all your heart, with all your soul, and with all your might. Take to heart these instructions with which I charge you this day. Impress them upon your children. Recite them when you stay at home and when you are away, when you lie down and when you get up. Bind them as a sign on your hand and let them serve as a frontlet between your eyes" (Deuteronomy 6:5-8).
Certain Jewish groups — including probably the Sadducees, and definitely the medieval Karaites — understood the last verse to be figurative; it means only that one should always be preoccupied with words of Torah, as if they were in front of one's eyes. The Pharisees, however, took the text literally; the words of the Torah are to be inscribed on a scroll and placed directly between one's eyes and on one's arm. Tefillin are wrapped around the arm seven times, and the straps on the head are adjusted so they fit snugly.
The text that is inserted inside the two boxes of Tefillin is hand-written by a scribe, and consists of the four sets of biblical verses in which Tefillin are commanded (Exodus 13:1-10, 11-16; Deuteronomy 6:4-9, 11:13-21). Because each pair of Tefillin is hand-written and hand-crafted, it is relatively expensive, and a well-made pair costs several hundred dollars.
The word Tefillin is commonly translated as "phylacteries," though the Hebrew term is more often used. I have never met a Jew who puts on Tefillin who calls them "phylacteries."
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http://www.jewishvirtuallibrary.org/jsource/Judaism/tefillin.html