There have been a lots of questions regarding fishing and cooking lately, as the update is still new and no one reads stickies (or so it seems). I'm not one to make guides, but I'm going to give this a shot. It's all off the top of my head with no preparation, so don't flame me too hard. Try and keep your flaming to cooking.
Bad joke...Okay, now that I've made my introductory speech I suppose I'll try and teach you a bit:
FISHING:To fish, you must visit the Fishing Pond. Once there, you have the option to select your fishing rod and equip it, but it is not required, as njaguar stocked up on them before the release. You can simply click [Go Fishing] and a fish will spawn right away. You will see two red bars as soon as you spawn a fish. The top bar is your fishing rod's health, in a sense (I believe it would be more accurate to call it durability, but whatever). The bar below is the fish's health. If your rod's health runs out before the fishes, your rod will break and the fish will get away, so be careful! It's okay for your loaner rod to break, but if you actually have your own rod it can potentially break for good (I'll get into this later).
You may be having trouble getting the fish's health down before your own. This is where a bit of skill comes into play. Every so often, the word "SNAG" will appear above the top bar. When this happens, you simply click the [Snag Counter] button. There is a bit of timing needed, because of the click delay.
Here's a tip:
While fishing,
DO NOT CLICK RAPIDLY. This will cause recklessness and you'll be more prone to miss those "SNAG" opportunities.
Play it slow - take turns attacking the fish. Click the bar once, and then wait for the fish to attack. Click again, then let him click. ...and so on.
If you do this, you'll be more ready for the "SNAG." Now when you see that horrible word pop up, you'll have plenty time to click the [Snag Counter] button.
Rinse and repeat.

...as for what level fish you should be attempting to catch, simply do whatever you have the most success with. With no rank in your proficiency, you can probably only fish successfully up to a level two fish (...but you could try a higher level if you wish).
FISHING DROPSNote: This is not 100% proven, but from what I've seen it works.Level 1-4 fish can have stats with up to a maximum of 50 life, mana, or life and mana combined.
Ex. Magical Fish - Heals 50 Life
Level 5-9 fish can have stats with up to a maximum of 100 life, mana, or life and mana combined.
Ex. Magical Fish - Heals 100 Life
...and so on (I'm basing my statistics off of what A_U_T_I_S_M has found).
Note: Fish can also spawn monsters (I think the monster level is equivalent to the level fish you are trying to catch).
Note #2: Fish can also spawn items (I'm not sure what all they can spawn, but so far I've got nothing but crap).FISHING RODS:I have not yet found a fishing rod, so I'm basing all of my information on what I've seen from other people.
Normal fishing rods - fishing rods without magical properties - break the first time if your rod snaps, so be careful and release the line if you're losing the battle!Fishing rods with magical properties can spawn a modifier that adds durability to the rod.
It is thought that each durability point added is equivalent to the amount of rod snaps that can occur.
Ex. A fishing rod with a durability modifier of 10 can break 10 times.
Okay guys - I'm tired of typing for now. Remember, the majority of the guide is based of of what I've seen, so I could be wrong on a few points. If you have proof that I am wrong about something, PLEASE let me know.
I was planning on making this a cooking guide as well, but people don't even seem to care about cooking at the moment, and it's pretty much the same as fishing minus a few small things, so this guide sort of works for it.
Once again - this is a spur of the moment thing. I just thought I'd try and stop all the threads from people asking for fishing help. If I get some decent feedback, I'll keep it updated when new information is revealed.
Thanks for taking a look!
I'll probably make the next one look a bit nicer (if there is a next one)...