It's the classic Battleship game, where you have to sink enemy ships before they sink yours. When you hit all the squares of an enemy ship you sunk it and you'll see a 3D real time scene where you can aim and shoot a torpedo to the enemy ship: if you hit it you'll earn extra points.
To place the ships on your own grid, drag and drop them to their final position and use the space bar to rotate them. During the battle, click on the enemy grid at the place where you want to shoot. A white or red indicator will notify you if the shot fell in the water or hit a boat.