After you've installed Linodef go to Administer → Settings → Input types and enable Linodef for the input type of your choice. For information how to use the Linodef tags refer to the Input type tips page.
Layout of embedded fields
Embedded fields will have the same layout as in their original node i.e. they use all the filters of the default input format to markup their text. With one exception: If that field contains Linodef tags they are removed to avoid an infinite recursion. This is the case if users refer fields to each other or to itself with Linodef tags.