Tunnels are the heart of I2P. All data inside the I2P network is sent through tunnels that hide the location of users. If an app has native I2P support, it will create its own tunnels.
The Hidden Services Manager lets you create your own tunnels manually. This is useful for when you want to use an app that doesn't have native I2P support, like:
The app starts an HTTP proxy tunnel at 127.0.0.1 port 4444 and IRC client tunnels at 127.0.0.1 ports 6668 - 6672. The IRC clients are "shared clients" on the same tunnels. Once you see the tunnel icon turn green on the main console (several minutes after startup), you should be able to connect.
When a tunnel's indicator is yellow with a clock icon, the tunnel is in standby mode. This means that I2P has not built the tunnel yet, but will do so automatically when you start using it. This helps to minimize resource use and conserve battery life.