How do I add a library project to an Android project?

Created a new Android project. I downloaded Action Bar for Android Library because I wanted to add one action bar at the top. I downloaded the file because I wanted to support Android 2.1 version of the device.

The description is as follows:

The action bar component is a library project. It means you don't have to copy-paste resources into a project. Simply add the action bar component as a reference to the project.

It's my first time on Android. What does this mean? How can I add a library to the project I have?

Procedure for importing libraries into eclipse workspace:

There's a lot of traffic here. There is not even a choice, and the next button is disabled.

What should I do?