Depends on the country. European licenses work throughout europe (for cars), for truckers they need to register with DVLA though. If a european license holder wants to get the 'benifit' of fixed penalty fines, rather than risk being taken to court for a minor offence, then car drivers too can get the paper part of the UK license associated with their European license.
Licenses issued outside europe vary, but on the whole I believe the general rule is that it's valid for 12 months. After that a Full UK license is required. Depending on the country of origin an International Drivers License may be needed in addition to the standard license.
And of course to drive a car on the roads in the UK, said car must be insured.