A lure is used at Pokestops to attract more Pokémon to the area for all players to see. This is different from an incense which is used for the specific user to see. Both are able to be stacked with each other and when used in conjunction with a lucky egg will have you leveling up in no time!
To use a lure simply click on the Pokestop and select the white opening over top of the icon (as pictured above). Upon clicking it will show you the pink lure you can set if you have one available. Simply click on the lure module (pictured below) and it will activate it.
Don’t start a lure and walk away as they are active for 30 minutes and you do not want to miss out on all the Pokémon you will attract!