Chilies belong to the capsicum family, as do sweet peppers, but there the relationship ends, for the fiery heat of the chili is in no way similar to its mild-flavored relation. Fresh chilies are now widely available and vary considerably in size, shape and heat factor. In principle, the fatter chilies tend to be more mild than the long, thin varieties, and the smaller the chili, the hotter its taste. Generally, the unripened, green chili is less fiery than when ripened and red. This is a useful guide to follow, but there are exceptions according to the variety, so it is wise to remember that all chilies, irrespective of color, shape and size, are hot, so use caution before adding them to a dish. Bear in mind that a little chili goes a long way, so add a small amount to begin with and gradually increase the quantity to your liking during cooking.
Take care when preparing chilies - the tiny, cream-colored seeds inside are the hottest part and, in general, are removed before using. Chilies contain a pungent oil which can cause an unpleasant burning sensation to eyes and skin, so it's a wise precaution to wear rubber gloves when handling chilies and be sure not to touch your face and eyes during preparation. Cut off the stalk end, then split open the pod and scrape out seeds, using a pointed knife, and discard. Rinse pod thoroughly with cold running water and pat chili dry before chopping or slicing as required. Once this task is completed, always wash your hands, utensils and surfaces thoroughly with soapy water.
Dried red chilies are sold whole and can vary in size from 1/2-3/4 to 1-1/2-2 inches in length, so this into account when using. If a recipe states small dried chilies, and you only have the larger ones, adapt and lessen the quantity accordingly, or to taste. Dried chilies are usually soaked in hot water for 1 hour before draining and removing seeds as described above), unless a recipe states otherwise.
Dried red chilies, when ground, are used to make cayenne pepper and combined with other spices and seasonings, also make chili and curry powder, and chili seasoning. They are also used in the making of hot-pepper sauce and chili sauces.
The Harissa spice mix uses a large quantity of dried chilies and is very hot, so be forewarned! This is a favorite spice mix for many Middle Eastern dishes. Don't be tempted to add more Harissa than recipe states, unless you are prepared for an extremely hot dish. A less fiery Harissa can be made simply by removing the seeds from soaked chilies before crushing chilies with other ingredients.
Green chilies are available canned. These are often seeded and peeled and taste pleasantly hot and spicy - ideal for adding to pizza toppings, sauces and taco fillings. Both red and green chilies also come pickled in jars (hot or mild/sweet) and can be found in delicatessens and ethnic food shops. Canned and pickled varieties should be drained and patted dry before using. Whether you seed the pickled type is up to you, just remember the seeds are the hottest part!