You should probably follow "The bootstrapping technique" section of local::lib verbatim (almost to the end; a couple of the last parts are optional) and ignore the rest of the Pod. It answers all of your questions, if not explicitly, with the sample code/instructions. If you get stuck, come back with exactly what you did and what output/errors you saw.

I found it confusing at first too. I have been successfully using the bootstrap instructions in four different *nixes (home, office, project sites) for a couple of years.