It's all outlined on their site.
You break the bill, extract / scratch the QR code, scan the QR code, get the private key, import the private key with some software (don't know if it's proprietary or not) into your wallet, and voila you've got money.
Not very simple but I'll probably buy one as a souvenir.
Yep, a souvenir and possible lottery ticket is what a bitbill could be. I like the idea of it and could probably sell many of them at 100% markup if I could assure buyers that it will be redeemable in ten years. I guess I'll have to wait until either bitbills or someone else releases open source code before I'll buy them for resale. Or I could make my own bitbills using something like optar and just have someone print me a sheet of hologram stickers.