Here's how to restore your mac to factory default (aka "Fresh out of the box"):
The next time the mac boots, it'll be just like a new mac boots: He/she will be able to set up user accounts/internet/register etc, without having to install the entire OS from scratch or having a possibly confusing flashing '?' icon.
How-to:
1. BACKUP YOUR STUFF
2. Pop in your install DVD, and hold down c to boot from it.
3. Complete the regular installation, making sure you select 'erase & install' from the installations-customize menu.
4. After installation, let it get to the first user prompt where it asks you to select a language - now hit apple+q. It will warn you that the computer will be shut down, ok this and you're done.
Next time it's booted, the new owner will only have to go through the standard 'new mac' steps.