The sensor mounts in special Nike + running shoes, but there are instructions in the comments of the link below on how to use the sensor with any running shoe. The receiver plugs into the bottom of your iPod nano or touch. The two communicate and feedback is shown on your iPod screen. Feedback includes your pace and distance run.
When you sync your iPod, the information from your runs in uploaded to a Nike website where you can get even more information about your training.
There's lots more to know about the Nike + iPod Sports Kit. Learn more about the Nike + iPod Sports Kit at the Apple Store.
Be sure to read the comments at this link because there is lots of practical information about using the Sports Kit.