This is a bowl that holds charcoal and powdered incense, which is the kind we generally use. The incense is on the altar to symbolize both fire and air, and also to bless and purify things. It's used to mark the boundaries of the circle, and to add atmosphere. It's also an offering to the Lord and Lady, and can attract helpful energies, or banish those that seek to hinder or harm.
Before you choose an incense, make sure that no one coming to the celebration is allergic to it. There are a lot of flavors to choose from; so there should be something that everyone can take.
Also, remember that it gets hot, and take precautions. If you look at the picture above, you'll notice that it's sitting on a cork pad. There is a reason for that!
This type of incense uses a block of self-igniting charcoal, sitting in a bowl full of gravel or sand (to absorb most of the heat.) In our group, the bowl we use is marble. The charcoal is lit, and then anything you put on it begins to smolder.
Using this method, you can mix your own incense from herbs or resins, or you can buy very nice pre-mixed blends.