L-Theanine is an amino acid that is not common in the diet (not one of the essential amino acids or even one of the common nonessential amino acids), and is deemed a nondietary amino acid similar to L-Ornithine or L-Citrulline. L-Theanine has structural similarity to glutamine and both neurotransmitters that are produced from it (GABA and glutamate) and is known to reach the brain and act in the brain following oral ingestion.
The properties of L-theanine can be summed up as being a relaxing agent without sedation (relative to something like lemon balm which relaxes but may also sedate), and is also implicated in reducing the perception of stress and slightly improving attention. While L-theanine does not appear to induce sleep, it may (quite weakly) help with sleep although its potency suggests it may not be a good first line treatment for this.
Interestingly, the relaxing and attention promoting properties of L-theanine coupled with the lack of sedation may have its most significant supplemental role in attenuating the 'edge' of many stimulants. A combination of L-Theanine with caffeine (200mg each) is noted to be synergistic in promoting cognition and attention.
L-Theanine, for the most part, is a relaxing but not sedating amino acid that is synergistic with stimulants such as caffeine as it can 'take the edge off'. It is effective by itself in the standard supplemental dosages as well, and although it can be attained via a diet high in green tea ingestion that is the only dietary source of L-Theanine
There are some health benefits associated with green and black tea ingestion that are thought to be more reflective of the Theanine content rather than the green tea catechins or the theaflavins, and this is thought to be related to cardiovascular health (as L-Theanine positively regulates nitric oxide) and some cognitive benefits.