There are two main types of chains; the first kind is a sentence containing a particular grammar point which a student creates. The next student has to repeat what the first student says, then add another example of the same grammar point. Here is an example :
Student 1 : "Yesterday I had my house painted."
Student 2 : "Yesterday I had my house painted and I had my car washed."
Student 3 : "Yesterday I had my house painted, I had my car washed and I had my hair cut."
The second kind of chain is where the first student creates a sentence using a particular grammar point. The next student creates a different sentence, using the same grammar point but which refers to the first sentence. Here is an example :
John got up late, missed his bus, got fired at work, tried to kill himself, was saved by a beautiful girl, fell in love and got married.
Student 1 : "If John hadn't got up late, he wouldn't have missed the bus."
Student 2 : "If John hadn't missed the bus, he would have got fired."
Student 3 : "If John hadn't got fired he wouldn't have tried to kill himself."
Both kinds of chains are a useful form of controlled practice, as they offer very intensive practice of a structure, but are more interesting and more contextualised than a series of sentences which must be filled with a particular structure.