Ciggarettes are items that can be used as a distraction. When thrown near the soldier's sight, the soldier will approach it for a while, then he will get it and he will go back to his previous position. While he approaches the cigarette, you can knock him down or do other actions.
To use it, click the Cigarettes icon or press the Hotkey T, then click on the ground near the soldier's sight. The soldier will easily notice it, giving you an advantage to escape or to knock him down.
It is worth noting, however, that this tactic does not always work. Soldiers who already carry cigarettes in their inventory will not approach any packs you throw in their view, and any soldier who doesn't leave their position (this can be checked using binoculars, but Snipers generally fall into this catagory) will ignore the cigarettes and remain where they stand. This can prove problematic if you throw the cigarettes in the enemies close view, rendering you unable to get them back, unless using Natasha whilst in seductive clothing or the Spy in an enemy uniform, or if you eliminate the enemy himself.
When an enemy spots your cigarettes (assuming that they are capable of leaving their position, or don't already have their own), they will drop whatever it is they're doing and make their way towards them. As they do so, a golden sight line appears which gets shorter as he approaches. This will help to alert you to the fact that he's on the move. If the line does not appear, then the enemy is either one of the few mentioned above, or there is a small obstacle in the way, in which case throwing to one side of it will achieve the desired effect.