Lice are mostly scavengers. Generally, they latch onto a human host and feed on the skin found on the host's body. Normally lice do not live in colonies. However, once established on the human host they will reproduce in size and number and continue to live off of the host until completely removed.
Lice are generally spread among people through direct contact and from contact with inanimate objects, like combs, beds, etc. They can live in fabrics and cloths for several days, which allow ample opportunity to spread.
Lice are not known to spread disease. However they can occasionally cause typhus and trench fever. Don't be alarmed though, as lice infestation is usually more of an itchy skin irritation.