|“||Then without taking counsel or waiting for the approach of the men of the City, he spurred headlong back to the front of the great host, and blew a horn, and cried aloud for the onset. Over the field rang his clear voice calling: 'Death! Ride, ride to ruin and the world's ending!'. And with that the host began to move...||”|
–Éomer in The Return of the King, The Battle of the Pelennor Fields
The Horn of Command allows you to control your hired units in various ways. It has infinite durability.
When you first craft the horn, it will simply be named the Horn of Command, but when you right-click with it for the first time, you will be offered the choice of turning it into either the regular Horn of Command (Halt/Ready Units) or the Horn of Summoning (Summon Units).
Because of this, it is best to have both types of horns in your hotbar when dealing with hired armies, unless you only have one or two units (that you could command in their individual command GUIs).
Neither the Horn nor the Sword of Command can be used to control tamed wolves.
This type of Horn of Command will appear in your inventory as "Horn of Command - Halt Units" and allows you to stop your units from doing anything, such as following you or fighting.
To use the horn, hold the right mouse button as you would with a bow. After a few seconds you will hear the sound of the horn and any units in range will follow the horn's orders.
After you have used the horn to halt units, it's name changes to "Horn of Command - Ready Units" which orders any halted units within range to wake up and behave as normal.
The Horn of Command - Halt/Ready Units is useful because it allows you to do something without your army following you, such as when you're working with lava or at great heights to prevent your units from taking damage.
The "Horn of Command - Summon Units" allows you to summon to you all hired units, but it will only work when the units are in loaded chunks (so you can't summon an army with a horn over several miles distance).
This is useful when rallying troops to oneself, and also when travelling. However, keep note that hired troops who aren't in guard mode will also regularly teleport to you while you're travelling (similar to tamed wolves).
Now, in the Beta 22 update, Horns and Swords will no longer command all your units. Instead, a horn will only command those units that are part of its own squad. This will make it a lot easier to command different types of units than before, and it will also make for much more realistic combat.
To set the squad that a horn will be used for, you'll need an item called the Table of Command.