You have to have Developer Tools installed. I am at work right now, not on a mac, but I will try from memory. I believe you get it from Xcode > Developer tools > Get more tools. I don't recall the exact menu tree but I am sure you can google it.
After that, it's integrated into the System Preferences panel. You simply pick which network conditions you want to simulate.
I think it's also possible to launch it from the xcode Utilities folder w/o installation. Sorry I can't be more coherent w/o my machine in front of me.
