To add or edit identities, go to Tools > Account Settings, and select an email account name (bold-face, in the left pane). Click the Manage Identities button. The Identities for [email account name] dialog will popup. Click the appropriate button to add, edit or remove an identity.
Thunderbird supports multiple email accounts and identities, and lets you switch from one the other on the fly. (In Outlook Express, for example, you must in effect log off and log back in to switch identity.)
Practical example: Nina is morning receptionist, and Lisa works in the afternoons. Both answer to the same email address: info@theirCompany.com. With identities, they can both have their own signature without having to switch email client, operating system credentials, or computer.
After a second identity has been setup, Thunderbird gives you the available choices under the From drop-down menu. The From drop-down menu is used both to let you choose which email account or which identity to use.
Identities are not the same as email account. In fact, identities are tied to an email account (email address), and Thunderbird will automatically use that email account's settings when you pick the identity that has it listed as email address. You can attach a vCard for each identity.