The important thing to realise is that an IPS file will only contain those parts of the hacked game which are different from the original release. That is vital for sites like this, so that they can distribute IPS files without being seen as distributing roms. An IPS file is all the work of the hacker, although I'm not sure that makes it legal according to a strict interpretation of current copyright laws.
Did you try using it? Notice there's a button on it that says "Create IPS patch". It then prompts you from there. It's really very simple.
Oh right! I was just about to post that I finally figured out how to do it. I just have one more question. I am trying to upload a ROM to this website. Ive already got everything I need but do any of you know where to put ROMs on the internet? Because it will only let me put the URL.
Geocities has free web hosting. There's also googlepages, but I think you still need an invitation to get a page there.
Also don't just upload the IPS. Put the IPS in a zip and include a readme that gives at least basic info about the game (which version of which ROM people should use with it, what has been changed, etc).