The name says it all. Your chalk goes in the bag. If you then put your hands in the bag you'll find they come out chalkier than they went in. These bags often (but not always) come equipped with a strap such that they can easily be attached to your waist.
Some of the chalk bags in our range are larger than your usual sport or trad variety. These are designed specifically with boulderers in mind. Typically these chalk bags will hold a few ounces of chalk and will have extra compartments for brushes, watches, wallets etc.