[barberousse]

For regular folk, the book is Discipline & Punish in English translation

You're explanation is fairly academic and I think we can be a little more concrete. Focault's point is really that discussions of power in the West tend to revolve around law and right, jurisprudence, when in fact the exercise of power qua something that alters your behavior is in almost every relationship we enter into with other human beings, no matter how anonymous: when we go to school (which is modeled on factories), when we go to work at the factory (where they wanna know how long you take having a piss) or (as many of us here are familiar with) the office, when we pack onto the train for the commute (which to me is a place where our behavior definitely meets up with the practical definition of panopticism, e.g. we act as if everyone is watching everyone else), when we "come out the closet" (despite being a 'practicing homosexual', for lack of a better term, Foucault was not comfortable being labeled gay, and its speculated that the conditions around his death by HIV were exacerbated by this; as well, I find sexuality to be strongly policed on all sides in America).

None of this is new in history, but modernity ramped up the scale and intensity to previously unseen levels (much like everything else)

[pmoriarty]

"when we go to school (which is modeled on factories)"

I thought they were modeled on prisons.

[misterdoubt]

Both, but the similarities in the three can be striking regardless of ordering.