Create a spreadsheet with columns corresponding to product fields and save the spreadsheet as a comma separated file, ie CSV. Here's an example of what the file then looks like:

Click on the browse button to locate your file, leave the other settings as they are below, and then click 'Upload File':
Change the drop-down boxes so that you match them up with which field the column headings in your file correspond to and click on 'Import Now':
Once the files is imported, the new products are categorised 'imported products'. Go to Catalog>View Products, select all those imported products and choose which category you want them to go in (at the bottom of the page). You then upload and add a photo for each product if you want one.