It is an upgrade to naval bases that allows you to see ships within a limited radius. On the world screen, there is a radar tab that shows the search radius of all radar stations built, and any nation's ships show as blips in the area. However, they are generally regarded as a waste of money, as they cost $2500 and have a very small range. I bought a bunch on one map and regretted it, because it most cases it is cheaper and easier to do a visual search.
