The inscription is made above the front door or porch, so that all who enter and depart the home may enjoy God’s blessing. It also provides a very public witness to the Faith.
In my previous parish, the priests blessed broken bits of chalk (easily purchased from a stationary shop) at the end of each Epiphany Mass, using the traditional formula from the Rituale:
O Lord God, bless this chalk that it may be used for the salvation of the human race. Through the invocation of Thy most Holy Name grant that whoever shall take of this chalk and write with it upon the doors of his house the names of Thy saints, Caspar, Melchior and Balthasar, may through their merits and intercession receive health of body and protection of soul. Through Christ our Lord. Amen.
After sprinkling the chalk with Holy Water, it was then distributed to the faithful, together with information sheets explaining the custom. The use of Epiphany Chalk is increasing slowly in this countruy - I keep noticing houses (and particularly presbyteries) with the 'CMB' inscription - and it is encouraged by the Directory on Popular Piety and the Liturgy (#118).