Greece defaulted on a loan from the IMF tuesday. That same day, they spent the last of the most recent tranche of bailout funds from the EU; they've been out of cash all week. It's not just the government that's broke. Banks are completely illiquid. All week, we've witnessed scenes of empty ATM's and pensioners queuing outside shuttered banks. The situation is desperate.
What a "no" vote would do, effectively, is end the negotiations for another bailout, which at the moment are "on hold." The Greek government would be forced to deal with the cash flow situation on their own; by printing their own currency rather than importing Euros. Banks and ATMs would be filled with drachmas, a currency created out of thin air, and thus unlikely to be trusted by the majority of Greeks; foreign investors will certainly have nothing to do with it. This causes numerous problems. Hyperinflation is a real concern. Perhaps the biggest worry of Greek planners though is imports. Greece has a big trade imbalance and relies on imports for crucial goods such as food, fuel, and medicine. If foreign exporters aren't willing to accept drachmas, and Greece is unable to obtain Euros through the credit markets, Greeks will be in a very tough spot.
The good news for Greece is that the crisis which would ensue from pulling out of the Euro should eventually come to an end, as opposed to the austerity regime which appears designed to extract wealth from Greeks for the foreseeable future. Default and withdrawal from the Euro would cause severe pain over the next year or two, but once the drachma becomes accepted, a lot of the immediate problems should ease. Moreover, a central government empowered to spend, rather than beholded to paying European creditors, would have the capital to kickstart the economy through various Keynesian programs (think FDR's New Deal). Greece has a massive unemployed population, and a number of economic needs which could be fulfilled by domestic industry. It's only the current debt extraction arrangement which keeps people unemployed and wealth flowing out of a country. A Greece unbeholden to foreign creditors would be able to put its people to work.
As far as the international effects of a Greek pullout, most pundits agree that the economic effects should be minimal. Most of Greece's debt is held by EU nations; very little of it is tied up in banks (and most of those banks are Greek banks who would be crashing on Greek depositors). Though UK and US banks have stepped up their investment in the Greek banking system since 2012 (the last time "grexit" was imminent, when "contagion" was a feared buzzword) the threat of an immediate European financial crisis appears to be very low. The main concern is the political ramifications. Greece's decision to jettison the Euro will serve as a precedent to other European countries which experience hardship. The integrity of the European Union is at stake.
 Technically they're just "in arrears" since the IMF doesn't consider a state to have officially defaulted until a month after missing a payment, but that's besides the point.