Alvin is threatening your Berk and the Dragons! To initiate a Battle and defend your Berk, click on Alvin's icon.   
Place the Dragons into the Battle field by selecting your Dragon on the right and then the "Drop Zone". They will automatically attack the closest ship. The  Catapult throws a fireball to wherever you want it to hit. The Flare directs your Dragons to a specific location. All actions in the Battle Mode require Energy. The more you use a particular ability, the more expensive it becomes. In order to collect more Energy, you have to destroy the ships. If you feel as if you will not win a Battle, you can Retreat your Dragons to avoid further damage. 
When you win a battle, you will receive Battle Keys. These keys are used to open chests from which you receive rewards such as Wood, Fish, Iron, Runes and Gears. The Gears will go into a collection for a special Dragon. To view your Collections, tap on the chest icon on the main screen.