There are tones of tutorials on youtube but what it boils down to is you enable it in the static mesh and it will create an invisible, inverted “glow” around all of your object. you can then play around with that in materials multiplying the values together to create effects around objects where they intersect.
Youtube covers it pretty thoughly. just search “UE5 distance field”.
You can see the effect here: Unreal 5.1 - Nanite mesh, Two Way Dynamic Gradient - Distance Field AO - YouTube at about 2:57