Damaged siding lets moisture enter exterior walls and rot away their framing. Make repairs as soon as you spot damage. Pack small cracks, splits, and open seams at board ends with latex/silicone or butyl caulk. If more than a few boards or shingles are failing, however, consider re-siding the entire wall.
You may be able to repair badly split pieces by applying epoxywood filler directly into the split. If not, you'll have to replace the damaged board or shingle -- an operation that requires careful, but not skilled, carpentry. The problem is that each course of lapped siding is held in place by nails driven through the course above it. The drawings below show how to repair lapped wood siding. Use the same steps to replace wood shingles, but don't try to pry out the nails; cut them underneath the shingle with a hacksaw.