Questions about installing mods and the archive formats they come in pop up a fair amount both on this forum and the Discord server, so I decided that having a linkable forum thread which explains everything might help.
1: Downloading the mod file
I doubt many people actually get stuck here, but just to be safe I'll include it anyway. You find a link to a mod (typically in a YouTube video description or on this forum's Mod Showcase board) and click it. You download it from the website linked (provided it is still available) and from this you'll get a file and/or a folder.
2: Archive formats
This step may be irrelevant, depending on the mod. As file sizes can be rather large, some people opt to release their mods for download in an archive file format which the end user must then use other software to decompress and extract the file from within. You will be able to tell if this is the case by looking at the file extension. If it is RAR, ZIP or 7Z, then you've got a compressed file. You will need software such as 7-Zip to extract the mod file/folder and continue.
3: Let's get Lucas' Simpsons Hit & Run Mod Launcher to recognize the mod
Place the extracted file or folder inside of any directory which you have configured Lucas' Simpsons Hit & Run Mod Launcher to search for mods in. Defaults include the following:
Documents\My Games\Lucas' Simpsons Hit & Run Mod Launcher\Mods <PATH OF LAUNCHER INSTALLATION>\Mods
You should then be able to find the mod in Lucas' Simpsons Hit & Run Mod Launcher's UI, and use it to your liking.
Mods for Lucas' Simpsons Hit & Run Multiplayer
Mod files/folders that you wish to use in Lucas' Simpsons Hit & Run Multiplayer don't really need to be stored anywhere particular, just drag them to the "Launch.exe" file.
Some double-checking and extra information
- Mods which are released in file format will have a "LMLM" file extension. Mods which use the folder format are rarer, however the folder which you place in a recognized directory should include at least one thing: a file named "Meta.ini" (not case-sensitive).