This sensor is used to detect magnetic fields. The current, and thus the voltage, running through the sensor is changed in relation to the presence of a magnetic field. This sensor is designed so it can tell you the amount the voltage has changed as an analog output, and if the voltage has changed as a digital output. Since the sensor can provide digital and analog outputs, there is a surprising amount you can do with it. You can easily make a working sensor, or make a much more complicated one.
This sensor is built in such a way that the sensor itself has everything needed to operate, including an LED. The as such, you can get a basic magnetic switch with nothing more than a 5v battery by connecting the magnet ports to the + and G pins. When a magnet is brought close to the sensor, the voltage will change and send a signal to the sensors integrated LED, telling it to light up. This is as simple as this sensor comes.