The UsbTinyISP is a micro-controller flashing interface, which will allow you to flash the code on various Atmel micro-processors. The below image references how to hook it up to an Arduino Uno development board - I couldn't find a suitable reference-image so I thought I'd provide it.
So when in doubt, turn the boards the same way as in the image and look for the red strand of the wire.
Then, for flashing an Arduino bootloader to the chip, it's a simple matter of selecting the UsbTinyISP in the Arduino (it's in the 'tools' menu) and clicking 'burn bootloader' (also in the 'tools' menu).
Remember - the UsbTinyISP must be installed with the appropriate drivers and it's only the UsbTinyISP that should be connected to the PC - not the Arduino Uno.
The Arduino IDE runs a version of the AVRDude-tool and will also take care of any setting of fuses on the micro-controller. Burning the bootloader takes about a minute or so, beyond which you can program the micro-controller in the IDE and then yank it from the Uno development board and put it in your own project.