Reference 4 uses a microphone to measure the frequency response of your room. It then builds a complementary EQ curve that corrects any tonal imbalances. You listen through this curve while mixing and hopefully hear a more accurate representation of your mix. This will ideally lead to better mixing decisions, and a track that sounds great on a variety of different speakers.
You’ll need an omnidirectional condenser microphone, an audio interface with an XLR input, and a mic cable with plenty of slack. The Reference 4 standalone app walks you through the entire process, which takes less than 10 minutes. While Sonarworks says you can use any omnidirectional condenser microphone, I got much better results when using their mic