To use Cydia, you must first jailbreak your iPhone (or iPad or iPod touch). Some jailbreak tools, such as JailbreakMe.com, install Cydia as part of the jailbreaking process. If your tool doesn't, download Cydia.
Once you've added it to your iOS device, find the Cydia app and tap to launch it.
When you do this, the first thing you'll see is the screen above asking you to identify what kind of user you are. An average user should tap the "User" button as that will deliver the most user-friendly option. The "Hacker" option will give you the ability to interact with the iPhone's command line interface, while the "Developer" option gives you the most unfettered access.
Tap the appropriate choice and continue. Based on your choice, Cydia may ask you to accept another preference setting. If it does, do so.