The Incubator is a tool used to hatch eggs. It comes with the Big Coop and the Deluxe Coop, where it appears to the left of the hay hopper.
To use the incubator, place an egg into it by right-clicking. An egg cannot be removed once it is placed in an incubator.
If the coop is at capacity (8 animals for a Big Coop, 12 for a Deluxe Coop), the egg won't hatch until a space is freed up. This can happen by selling an animal or moving an animal to another coop. Once the coop is below capacity, entering will cause the egg to hatch instantly.