The Highlight Reel allows you to quickly create a match story that strings all of your League of Legends kills into one video. It's already enabled automatically, you don't have to turn it on in the Preferences.
(Note: This may take a few minutes to appear based on downloading the event data)
Hitting the Preview or round 'Play' button will automatically pick up your kills and allow you to view the Highlight Reel before it uploads. It also will attach a Champion Intro in the beginning, and includes an outro showing Victory or Defeat.
Once you have previewed it and you want to upload it, hit the 'Share Highlight Reel' button.
(You can also create and upload the Highlight Reel automatically by clicking 'Share', which is shown in the first image in this article)
Users who you follow on the Plays.tv website that share a Highlight Reel will appear on your main video feed.
While looking at someone's Highlight Reel page, you may notice tabs under their Profile Picture. This shows all of their Uploaded Highlight Reels within the last 7 days.