Inspirations

Na is the Lord's concealing grace, Ma is the world, Śi stands for Śiva, Va is His revealing grace, Ya is the soul. The five elements, too, are embodied in this ancient formula for invocation. Na is earth, Ma is water, Śi is fire, Vā is air, and Ya is ether, or Ākāśa. Many are its meanings.

Namaḥ Śivaya has such power, the mere intonation of these syllables reaps its own reward in salvaging the soul from bondage of the treacherous instinctive mind and the steel bands of a perfected externalized intellect. Namaḥ Śivāya quells the instinct, cuts through the steel bands and turns this intellect within and on itself, to face itself and see its ignorance. Sages declare that mantra is life, that mantra is action, that mantra is love and that the repetition of mantra, japa, bursts forth wisdom from within.

The holy Natchintanai proclaims, "Namaḥ Śivāya is in truth both Āgama and Veda. Namah Śivāya represents all mantras and tantras. Namaḥ Śivaya is our souls, our bodies and possessions. Namaḥ Śivāya has become our sure protection."

—Satguru Sivaya Subramuniyaswami

The book "The Ancient Power of Sanskrit Mantra and Ceremony: Volume I" by Thomas Ashley-Farrand defines Om Namah Shivaya as:

"This mantra has no direct translation. The sounds relate directly to the principles which govern each of the first five chakras on the spine...Earth, water, fire, air, ether. Notice that this does not refer to the chakras themselves which have a different set of seed sounds, but rather, the principles which govern those chakras in their place. A very rough, non-literal translation could be something like, 'Om and salutations to that which I am capable of becoming.' This mantra will start one out on the path of subtle development of spiritual attainments. It is the beginning on the path of Siddha Yoga, or the Yoga of Perfection of the Divine Vehicle."

Source: http://en.wikipedia.org/wiki/Om_Namah_Shivaya