You highlight the text you want to change, then you click on the icon. That is the easiest way. In the standard editor the text will be surrounded by some tags; similar to this for bold text.
The result when you view the post would be.
some text
In the WYSIWYG editor you would simply see the bold text, not the code. When in the WYSIWYG editor you can also click on the icon, start typing the altered text, and click on it again when you want to stop. So click on B for bold, type some bold text (which you will see immediately), then click on it again to stop.
If you want more control, and to see what things will look like, you can alway click on the Advanced option at the bottom of quick reply editor. There you wills see a Preview Post button that you can click on at any time. This will show you what you post will look like in the preview pane (above the editor). You can use this to experiment with the various tags and learn what they do.