Open the project’s Payments page. The top row shows the contract value and what is open, in escrow and released. Each contract lists its milestones.

1. Press Fund on a milestone to put its money in escrow.
2. The vendor does the work and asks for release.
3. You release it, and the vendor is paid.

Here too: read the Signed contract, Close contract when the work is finished, or Open dispute if something has gone wrong.