Simplified sleep Demo (Created since the others I found were too complex to really illustrate the point)

gistfile1.txt

/* Simplified sleep Demo
 * ---------------------
 * Shows how to make the Arduino sleep and wake up again.
 *
 * Connect pin 2 and 12 to 5V via a pullup-resistor (10k)
 * Connect pin 12 to ground to make the Arduino sleep
 * Connect pin 2 to ground to make the Arduino wake up again
 *
 * Based on the code in http://www.gammon.com.au/forum/?id=11488
 * by Nick Gammon. Example written by Jens Chr Brynildsen 2013
 */

#include <avr/sleep.h>

int sleepPin = 12;  // Connect this pin to ground to sleep
int wakePin = 2;    // Connect this pin to ground to wake up

void setup() {
  pinMode(13, OUTPUT);
}

void loop() {
  // toggle the LED
  digitalWrite(13, !digitalRead(13));
  delay(100);
  
  // Check if we should sleep
  byte shouldWeGoToSleep = digitalRead(sleepPin);
  if (sleepStatus == LOW) {  // put the device in sleep
    sleepNow();
  }
}                

// interrupt service routine in sleep mode
void wake ()
{
  sleep_disable ();         // first thing after waking from sleep:
  detachInterrupt (0);      // stop LOW interrupt
}  // end of wake

void sleepNow ()
{
  set_sleep_mode (SLEEP_MODE_PWR_DOWN);   
  noInterrupts ();          // make sure we don't get interrupted before we sleep
  sleep_enable ();          // enables the sleep bit in the mcucr register
  attachInterrupt (0, wake, LOW);  // wake up on low level
  interrupts ();           // interrupts allowed now, next instruction WILL be executed
  sleep_cpu ();            // here the device is put to sleep
}  // end of sleepNow