What is the universal property of normalization?
I've realized that my answer is wrong. Here's the right answer: if $Z$ is a normal scheme and $f: Z \to X$ is a morphism such that each associated point of $Z$ maps to an associated point of $X$, then $f$ factors through $n$.
A counterexample that shows why what I said previously doesn't work: let $f$ be the inclusion of the node into the nodal curve. There is no unique lift of $f$ to the normalization of the nodal curve.
What's going on here: taking the total ring of fractions is not a functor for arbitrary morphisms of reduced rings. You need a morphism such that no NZD gets mapped to a ZD, which is equivalent (for Noetherian rings) to saying that the preimage of any associated prime is an associated prime.
If $X$ is a variety, the normalization $X'\to X$ is the maximal finite birational map to X, and the minimal dominant map from a normal variety to X, where maximal means any other finite birational map $Y\to X$ fits in a unique diagram $X'\to Y\to X$, and minimal means any other dominant map $Z\to X$ from a normal variety $Z$ fits in a unique diagram $Z\to X'\to X$.
In particular a variety is normal if it admits no non trivial finite birational maps. This gives you immediately that nodal curves are not normal, and neither are any varieties obtained by identifying points.
The meaning of normality is explained extremely clearly on page 181, in Mumford's unpublished second volume Algebraic geometry book, revised and edited now by Oda, and available online. http://www.math.upenn.edu/~chai/624_08/math624_08.html
The main geometric point is that normal points are locally irreducible, or "unibranch". The more delicate analytic aspect is the Hartog's extension theorem.
The key is Zariski's main theorem: I quote from Mumford-Oda:
"6. Zariski’s Main Theorem A second major reason why normality is important is that Zariski’s Main Theorem holds for general normal schemes. To understand this in its natural context, first consider the classical case: $k = C$, $X$ a $k$-variety, and $x$ is a closed point of $X$. Then we have the following two sets of properties:
N1) $X$ formally normal at $x$, i.e., $\mathcal{O}_{x,X}$ an integrally closed domain.
N2) $X$ analytically normal at $x$, i.e., $\mathcal{O}_{x,X,an}$, the ring of germs of holomorphic functions at $x$, is an integrally closed domain.
N3) $X$ normal at $x$.
N4) Zariski’s Main Theorem holds at $x$, i.e., $\forall \; f : Z \to X$, $f$ birational and of finite type with $f^{−1}(x)$ finite, then $\exists \; U \subset X$ Zariski-open with $x \in U$ and res $f : f^{−1}U \to U$ an isomorphism.
U1) $X$ formally unibranch at $x$, i.e., Spec $\mathcal{O}_{x,X}$ irreducible.
U2) $X$ analytically unibranch at $x$, i.e., Spec ($\mathcal{O}_{x,X,an}$) irreducible, or equivalently, the germ of analytic space defined by $X$ at $x$ is irreducible.
U3) $X$ unibranch at $x$, i.e., if $X'$ = normalization of $X$ in $R(X)$, $\pi : X' \to X$ the canonical morphism, then $\pi^{−1}(x)$ is a single point.
U4) $X$ topologically unibranch at $x$ — cf. Part I [76, (3.9)].
U5) The Connectedness Theorem holds at $x$, i.e., $\forall f : Z \to X$, $f$ proper, $Z$ integral, $f(\eta Z) = \eta X$ and $\exists U \subset X$ Zariski-open with $f^{−1}(y)$ connected for all $y \in U$, then $f^{−1}(x)$ is connected too.
6.1. I claim: i) all properties N are equivalent,
ii) all properties U are equivalent,
iii) $N \Rightarrow U$."
The reference [76] is to Mumford's Alg Geom I, Complex projective varieties. Compare also the discussion of ZMT in his red book.
Normalization is right adjoint to the inclusion functor from the category of normal schemes into the category of reduced schemes. In other words, if $n:Y\rightarrow X$ is the normalization of $X$ and $f:Z\rightarrow X$ is any morphism where $Z$ is a normal scheme, then $f$ factors uniquely through $n$.