When you're working on a manuscript you can easily search your Papers library and enter a reference. HIt the 'control' key twice and a small Papers dialogue box will open up regardless of whether you have Papers running in the background or not.
Type in your search command and identify the paper you would like to cite.
Hit 'enter' and then select insert citation.
Papers generates a unique 'cite key' which is inserted into your document.
After you've found your first citation, either select 'Search another Paper' or just start typing.
The first paper you found is still there ('Papers 2011' in the example below), Papers just has it on hold for now until you have finished finding all the references that you would like to add into your manuscript.
Once you select 'Insert Citations' Papers will insert all the citations you selected for this instance, each one with their own unique cite key.
Hit the 'control' key twice again to bring up the citations menu where you can format your paper and add your bibliography. Before formatiting your paper ensure you select the citation style that you would like to use.
Paper can format your work in almost 3000 different citation styles. Type in a journal name to find a citation style you would like use.
Hit 'enter' and Papers will format your paper according to the citation style that you chose.
When the formatting has been completed you'll notice a new document has been opened up. It has the same name as the original document with 'formatted' added to the end of the name.
This is your finished, formatted document with bibliography. If you would to add more citations you will need to do this in your original document