After installation, all you have to do is drag-and-drop your photos and wait for the mini-Polaroid to pop out. (The pictures show up as a muddy brown for a minute or two before the picture comes through—cute feature!) The final products show up in your Pictures folder as JPGs.
Right now, the software’s only available for Macs, but a Windows version is coming soon. You can see a bunch of other people’s Poladroids on Flickr.
Here’s one I did, with the original picture:
And the Poladroid version: