Click on pixels to paint. Hold to erase. Erase mode checkbox flips this around. To add more characters, input them into and press . In order to make consistently-sized characters easier, you can use guidelines (at the top). Move individual characters inside their canvases by clicking on arrows. Click on a part of the preview to scroll to a given character.
Important: you can see the actual size of the output font by dragging slider all the way to the left.
For now, only monospaced fonts are supported so all characters must be the same size. If you want to change that size, use font box settings at the top. If you resize the font box to a smaller size, the characters will be cut off at the right and bottom accordingly.
Important: the native format for Font Designer! is JSON, you cannot import other formats. So use that if you want to continue editing your font. If you want to scale the output font, you can use the slider. The scaling only scales up, evenly in both axis, and by an integer amount (each pixel just gets duplicated that many times). It doesn't work with the JSON, only with other formats.