The chatbox will allow you to beautifully show your chat on screen.
To set it up you will want to make sure you have prepared your software for widgets. (Guide can be found here). Next, go to http://www.streamlabs.com/dashboard/chat-box and copy your custom link at the top and insert it into your streaming software.
Theme can be used to set the look of your chat overlay using several premade themes or use custom css.
Badges will set what badges are shown in your chatbox widget. If you want to show mod icons or disable them.
Extra Emotes can be checked if you want to show BTTV or FFZ emoticons on your chat overlay.
Background Color will set the color behind the chat. (Only worry about this if you are window capturing)
Text Color is the color of the chat messages in your chat overlay.
Text Size sets the size of all text in the overlay.
Hide Message After can be used to fade messages away after a set time. You can use the "Always Show Messages" box to disable fading .
Hide Chatters can be checked and you can list names of users you want to hide in your chat. (Such as common bots used).