You have to unrar the main mod file.
Once you have the '1200 Europe' folder you have to place it under Mount&Blade Warband/Modules. The game folder 'Mount&Blade' is usually installed and therefore located under Program Files, though you might have it installed in another place.
Once the module folder is under 'Modules' just click on the Mount&Blade Warband desktop shortcut or exe and get to the first menu that appears in the centre of your desktop. In the upper part you have 'Current Module', were you can choose the module you want to play. Native is the original module (the one that comes with the game), just select 'Europe 1200' and click on 'Play Mount&Blade Warband'. And Enjoy!