you can basically put anything there, folders, applications, even documents.
all you need to do is open the finder and drag the item there.
you can also change the size, for this you need to:
. open the finder
. click on "view"
. the "customize toolbar" (a window will slide down) you will find other options and things you might want to add here.
To add items you can do it without opening the "customize toolbar" option; but to remove them you need to go to "customize toolbar" and then drag them out. They disappear with a little puff of smoke.
Please, no. I'm glad people now have the instructions, because this is a really neat little feature of the OS, but this will not go well if left open. Snide remarks will be made, replies will escalate, and soon we'll be in deleting posts.