The downloaded "patch" should consist of 4 files:

D2MultiRes.txt
D2MultiResGame.exe
D2MultiRes.dll
D2MultiRes.mpq

To install, simply copy D2MultiResGame.exe, D2MultiRes.dll and D2MultiRes.mpq to your Diablo II directory. You do not need to copy over or replace any of your files, and none of your files will be changed. At the moment, D2MultiRes only supports the GDI (windowed mode) and DirectDraw graphics plugins. If you are using Glide you'll almost certainly crash. If you're using Direct3D you'll be able to run Diablo II, but expect to see some funky graphic glitches while playing the game. To switch to DirectDraw, run D2VidTst.exe (found in your Diablo II directory) and choose the DirectDraw option. You shouldn't notice any major drawbacks for using DirectDraw over Direct3D, so for most users this probably won't be a problem.

To run, start D2MultiResGame.exe. You may use any of the normal command line options available when playing Diablo II, such as "-w" for windowed or "-direct -txt" for mods. Diablo II will start in its normal resolution, however when playing a game you will be able to switch to a new, higher resolution. To do so, just go to the Video Options menu and select the Resolution menu item. This will bring up a new panel that will list your available resolutions. Click the one you wish to play in and
Diablo II will switch to that resolution.

Taken from the site you linked to.

What does it mean the Diablo 2 directory? (I literally know next to nothing about computers beside the very basics)