The Hatchery is specifically designed to provide the warmth needed to hatch a healthy Baby Dragon. In order to use it, you must reach player level 4.
Eggs found in the wild are being transported to Berk and kept until needed for hatching. The number of eggs you can store depends on your level.
You can queue hatching of more than one Dragon at a time by using the plus symbol under the egg. The hatched Dragon will go directly into your Roster and Book of Dragons. The Double Egger upgrade will let you hatch 2 different type of eggs at a time.
Upgrade the Hatchery to hatch Dragons of different colors and rarities.