1) Extract the file into your ...SkyrimData folder (i.e. where Skyrim.esm is located). By default, the full path is "C:Program Files (x86)SteamSteamappsCommonSkyrimData" but it can be different if you installed the game (or Steam) elsewhere.
2) Launch the game. When the launcher is up, go in "Data Files" and make sure "Headbomb's Better Sorting.esp" is ticked. If it's ticked, you don't need to do anything else. If it's not ticked, tick it.
2a) If "Data Files" is greyed out, you need to go into your SkyrimPrefs.ini (located in C:UsersUSERNAMEDocumentsMy GamesSkyrim) and add "bEnableFileSelection=1" under the line that reads "[Launcher]" (without the quotes).
3) Play the game as usual.

To uninstall, just delete "Headbomb's Better Sorting.esp". The next time you play the game (assuming you saved after installing my mod), you will get a message saying it's possible that your save game is messed up. You can safely ignore this, and load your savegame as usual.