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You can normally access this dialog by pressing ShiftAltX or clicking the New index entry 
button of the Insert toolbar
.
This dialog can be used to create one or multiple index entries in the document.
In the "Index entry" edit box at the top of the dialog, specify a term or topic that a new index entry should contribute to the document's index. On the illustration above, the index entry would add a "Darwin, Charles" item to the index.
In simpler cases, document indexes have a linear (one level) structure - like on the illustration below:
But you might wish to group sets of closely related concepts in your index, i.e. create a hierarchical (multilevel) index:
To do so, use colons within the entry text to separate subentries of different levels. For example, to have the "Frog", "Salamander", and "Toad" items grouped under the "Amphibians" main entry in the index (as shown on the illustration above), create the corresponding index entries with the following entry text: "Amphibians:Frog", "Amphibians:Salamander", and "Amphibians:Toad". This would create a 2-level index. The 1-level item "Amphibians" would be associated with the "Index 1" style in the generated index. And the 2-level items "Frog", "Salamander", and "Toad" would be associated with the "Index 2" style.
You can have items of up to 9 levels in your index. Just use colons to separate corresponding subentries within the entry text. For example, "Amphibians:Frog:Bullfrog", or "Amphibians:Frog:Bullfrog:American bullfrog".
When you are building more than one index in your document, and want particular index entries to appear only within particular indexes, you can label those entries with a special identifier. For example, if you are building an index with names and an index with places, you can use the "names" identifier for the index entries that should be included in the index with names. Correspondingly, the "places" identifier can be specified for the index entries that are supposed to appear within the index with places. For more information on creating multiple indexes, please click here.
In most cases, items of the generated index are followed by the ordinary number of the page on which the corresponding index entries reside. For example, if you created an index entry with the "Frog" entry text on page 2 of your document, the "Frog, 2" item would be included in the document index. This is how an index entry gets included in the index if the "Current page" reference type is checked.
Instead of referring to a page number, an index entry can refer to another entry of the index. If you check the "Cross-reference" option, you can type a cross-reference text (normally starting with "See ") that should be put in the index for this entry instead of a page number. For example, an index entry with the following options:
would add the following item to the index: "Grizzly, See Brown bear".
Finally, an index entry can refer to a range of pages. Such index entries get included in the index like this: "Bears, 12-15". To make an index entry refer to a page range, you should first bookmark the corresponding pages in your document (select the required fragment in your document, then press ShiftAltB or click the New bookmark 
button of the Insert toolbar
). Then you can check the "Page range" option in the "Mark Index Entry" dialog, and choose the corresponding bookmark from the "Bookmark" box.
Normally the font format of page numbers in an index matches the font format of the corresponding "Index N" styles. But if you check the "Bold" and/or "Italic" options in the "Mark Index Entry" dialog, the corresponding item of the index would have the page number formatted in bold and/or italic irrespective of the font format of the "Index N" styles:
If there is no selection in the document, clicking the "Mark" button creates a new index entry at the current cursor location in the document. If there is one or multiple fragments selected in the document, a new index entry gets inserted before each of the selected fragments.
The "Mark All" button picks up the currently selected word or phrase in the document (if there is a selection) or the word at the current cursor location, then scans the entire document case-sensitively for instances of that word or phrase, and inserts a new index entry before each of encountered instances. For example, if your document contains multiple occurences of "Darwin", and you want to associate each of those occurences with same index entry, you could click any of the occurences of "Darwin" in the document, then press ShiftAltX, specify required options for index entries, and click "Mark All".
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