I use a non-stick pan. cut cheese into thin strips, and melt it on medium. You could do it on low, but it would take longer. High would burn it, I think, unless you watched it like a hawk. When it melts, stir it periodically as it bubbles. Dust the top with black pepper. Stir more and let it cook for at least a few minutes.. If you cook it longer it separates into like curds and oil. I just use the clumpy bits (Daughter likes that best) and dump the oil that comes off - although there's bound to be something yummy to use that for. Myself, I like my cheese just well melted, bubbled for a few, seasoned, and then onto the toast. Seriously good with a cup of tomato soup for lunch. (We had it for supper last night, actually.)
If you want to get fancy, you can put a bit of a mustard powder in, or other spices, but I actually prefer just the cheddar cheese and the pepper. You can also mix in other cheeses....