First, this feature is not for everyone to use. If your site is affected by spammy links and the issue is beyond your control, you can use this feature to get rid of the spam links. Particularly for websites that are affected by Penguin updates, you should consider using the Google Disavow Links feature right away.
The hardest part of the process is creating a list of links which you wish to disavow. You can use the Google Webmaster tool to download a list of backlinks pointing to your site. You can also use any 3rd party backlink checker tool, and my favorite is Ahrefs which not only monitors old links, but also allows you to see the list of all new links and dead links.
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