Pretty simple bud.
It's just a switch, that's turned on or off by electricity rather than your grubby mitts.
What this means in terms of your VW is that your old corroded starter circuit, which can't quite keep up with the huge drain that your starter wants but can still handle a little trickle, is only used to flip a tiny switch now.
That switch in turn has beefy wires going from the battery to your starter, and all of that resistance that's built up over the years isn't a problem any more.
So, your ignition feed (which ends up as a push-on connector on your starter solenoid, now goes to #85 terminal on the relay (they should be numbered). Then from #86, you'll need to make up a wire that goes to earth. Doesn't have to be big, standard automotive cable is fine.
So, that's your switch circuit. when you turn the key, that relay will turn "ON" now.
Now, the power side of things. This needs chunky-ish wires- as long as the wire core is the same side or bigger than the original wire going to your starter solenoid, you're fine. Basically battery + to #30 on the relay (via a 15 amp fuse). You can take this feed directly from the battery, but there's also a good connector on the starter motor.
When that's hooked up, all that's left is to run another big wire from #15 on your relay to the original spade connector on your starter solenoid, and you're set.
There's another write-up and a diagram here:
http://www.type2.com/bartnik/relay.htm" onclick="window.open(this.href);return false;
