Hi,
Actually, its difficult to say with tar.gz files - it could be source code or a binary distribution. Its also easier to use the 'z' flag with tar rather than running gunzip separately. For example :
$ tar zxvf whatever.tar.gz
you would then cd to the subdirectory created by tar ..
$ cd whatever
then list (ls -l) the files in the directory and you will invariably find some kind of instructions in a README or INSTALL file or suchlike. If its source code you'd have to have the gcc complier collection plus utilities installed but, as htin11 says, generally you just do :
$ ./configure
$ make
$ su (enter root password)
# make install (normally should be run as root)
# exit
$
If it were something like a binary package of apache you have to follow the instructions in the README or whatever. It might be as simple as :
# ./INSTALL.SH
... but maybe not.
If you ever get tar.bz2 files you can use the 'j' flag with tar - e.g.
$ tar jxvf whatever.tar.bz2
These normally are source tarballs - especially for larger 'projects' like the kernel itself.
Regards