'bear' files have been created artificially a while ago, though it is still unclear if they can be enabled on any system at all under normal circumstances. 9.2.1 doesn't even have the option.
All the bears I have created myself have been named 'Memory Contents', resided in the System Folder, and were invisible. Something like ResEdit's "Get File/Folder Info" option (specifically, the feature that lets you turn invisibility off) is very helpful for interacting with them .
They are the size of virtual memory (vm must be turned on for them to be enabled). Using Open Firmware to limit the usable RAM is required if you want to do anything with the bear, as a file that takes up all of vm space is very very hard to open. Most programs try to load a file into memory all at once, which can't work unless the vm size the bear was created in is less than the current memory size.
Bears seem to compress pretty well, which is nice.