It's just a quick/easy way to look up words and add them to a list. I think it's called that because it's nice to use while reading. There's a video explaining it in "Help and Support".
I do, it's easy. Just enter the name of the set, something like the title of your manga for example, then for the list type the name of the chapter or something and you simply put in words you don't know in Japanese. This can work with any media, be creative with how you seperate stuff. If it's a game, you can make multiple lists based on the worlds in a game, if it's an animé then by episodes, etc etc...
