It works like any other mod. If you aren't putting mods together (which modular mods are easier to do), just place it in your mods directory.
The default installation directory for BTS, plus the mods subdirectory, is:
"c:\Program Files\Firaxis Games\Sid Meier's Civilization 4\Beyond the Sword\mods"
Drag and drop the folder in the zip file to the above directory, and BTS should allow you to load the Insane Barbarians mod (Main menu, Advanced, Load a mod).
I typically play a custom game. Marathon game speed, Raging Barbarians on, Monarch +/- 1 level of difficulty. Sometimes I add 1 or 2 more civilizations to the game.
At that level of difficulty, you have to burn about as much effort as you usually do to take out another civilization in the ancient/classical era, but you end up just holding off the hordes. Around the middle ages, the barbarians will have overrun a handful of AI civilizations, but the power of barbarians is waning.
The CoL/Currency economic expansion allows you to start expanding against the Barbarian cities that will litter the world. By the middle ages, you will be able to steamroll the barbarian cities. And by the age of exploration, you can send boats to neaby overrun continents and advance on the hordes there.
The BTS AI understands how to conquor barbarian cities reasonably well (they are still a bit cautious about it).