I cover this step by step in my books, and it's a bit hard to describe without illustrations. I've also got a tutorial for it for Muvipix.com subscribers.
But basically, you click the yellow ball icon to activate the tool, then define an object to track. Once the program creates a motion track, you can drag a clip, clip art or even a title onto it and the tool will create a picture-in-picture image that follows the tracked object.
We've got lots of free tutorials, tips, stock footage, sound effects and music at http://muvipix.com too.
Have you checked out my free Basic Training with Premiere Elements series?