When you open the app, you'll see the metal detector indicator. It's pretty easy to see how the app works; just put your device close to anything with metal to see how the meter works. In the settings, you can activate a sound to alert you when you're close to something with metal.
Metal Detector is an app that does in fact let you use your Android as a metal detector. That said, even though it works, it may not be the best option if you're going to the beach in search of buried treasure.
Requires Android 2.3 or higher