Team play works like regular play, with a few exceptions.
Teams share a single settlement and must collect twice as many settlers to win.
The upside is that a team can play cards faster, ie: A player lays down a SUPPLY on their turn then their teammate plays a SETTLER off of that SUPPLY.
This rapid fire gameplay tends to be faster than regular play, so playing in teams can be a good way of speeding up games if you're in a hurry.
The second benefit is that because your team shares a settlement, either teammate may play a card to defend it. It doubles your defensive and offensive capabilities.
Also, it's pretty fun.