At the start you are faced with an empty board. Click the "new challenge" checkbox to create a randomized setup. A set of colored strips appear. You have to place them on the board, half of them horizontally and half of them vertically.
To place a strip, click the arrow at a strip, then click one of the arrows on the board. Depending on which target arrow you click, your strip might get placed inverted.
Where two strips cross, the colors must match.
You win once you've managed to place all the strips.