From the Store description:
Skyline finds direction and air-line distance to places nearby. It's also a nice augmented reality compass, perfect for travel and hiking. Skyline works offline once the geographical data for the region have been loaded to the device. Skyline doesn't run on the Lumia 520, 530, 625, 630 or other devices without a magnetometer.
The idea is simple enough - find your location, download information about the towns, cities and (yes) remote cities around you, and then display them in an appropriate position on the skyline - hence the name. 99% of places are too distant to be seen within the horizon, of course, but it's still interesting to see what's where - and how far away it is.
There's not much to configure - obviously, turning on location services does a much better job in terms of grabbing more local towns, as well as the international majors.
Notably, Skyline needs a digital compass to work, so lower end Windows Phones may be out of luck here. See your device's specifications if you're not sure! You can grab Skyline here in the Store.