You direct heat onto the engine head, the big orange finned metal part on the top of the engine. You can use a blow dryer, heat gun, or these engine heaters are becoming popular as well
http://www.amainhobbies.com/product_...ine-Heater-12V (there's an AC version as well). Either way you do it, the theory is to saturate the engine with heat, letting all the internals heat up too, allowing the engine to start up easier. It also prolongs the life of your engine internals. The most damaging moment to a nitro engine is during a cold start up.