Dangeradar continually scans for hostile player activity around you, reporting their numbers, classes, races, names, levels and guild.
You don't need to do anything. Whenever an enemy player presence is detected, a portrait will appear on the top part of your screen. If you move your cursor over this portrait a tooltip with more details will be shown.
When there are too many players, the portraits will collapse into stacked mode, where it'll only show one portrait per each class detected, and the tooltip will now display a list of all players of that class.
After a while with no further activity, a player's presence is considered stale and the corresponding portrait disappears.
Dangeradar uses an extensive detection engine which is based on several activities, from spell casting to emotes and chat messages. It can even estimate the player's level before this information is fully available.