There were two altars in the Temple. The copper altar was the one used for animal sacrifices. The other was an altar of gold upon which an incense made from a mixture of spices was offered twice daily. Our verse speaks of the obligation to offer these spices in the morning; the obligation to do so in the afternoon is found in the next verse. The Rambam considers these a single mitzvah, though Ramban (Nachmanides) considers them two independent mitzvos. There is also a commandment to make the incense according to a specific formula (in parshas Ki Sisa, Exodus 30:34), but that is universally agreed-upon as a necessary precondition rather than a mitzvah in its own right. (Just like you can’t shake a lulav if you don’t buy a lulav, you can’t burn incense if you don’t have incense!)
The reason underlying this mitzvah is to give glory to the Temple so that it should be held in proper esteem by those who go there. The scent of the incense was something that gave joy to those who smelled it.
There were 15 ingredients in the incense. Four of these are mentioned in the Torah, but the entire list is found in the Oral Law. This braisa, found in tractate Kerisos 6a, is read as “Pitum HaKetores” in the morning karbonos sevice and on Shabbos after Ein Kelokeinu.
Any kohein could burn the incense and the right was distributed daily by lottery (Mishna Yoma 2:4). Everyone else had to exit while the incense was being burned as per Leviticus 16:17. (That verse is actually speaking of the Yom Kippur service, but see Mishna Kelim 1:9.)
Just like the family of Garmu were the most proficient in making the show bread (see Mitzvah #97), there was a family named Avtinas who had the knack when it came to making the incense. Only they knew how to make the incense so that the smoke would rise in a straight column. (The secret ingredient was called “ma’aleh ashan” – “that which makes the smoke rise” – but they would not reveal its identity.) Like the family of Garmu, the family of Avtinas refused to share the secret so that it could not be used for idolatry. And, just as the family of Garmu didn’t keep fine flour at home, the women if the family of Avtinas did not wear perfume. This way, no one could think that the family used the secret of the incense for their own benefit.
The mitzvah to burn the incense applies to male kohanim at a time when the Temple is standing. It is discussed in the Talmud in the tractates of Kerisos (starting in the very first mishna ), as well as in Tamid, Yoma, and elsewhere. It is codified in the Mishneh Torah in the third chapter of Hilchos Tamidin and it is #28 of the 248 positive mitzvos in the Rambam’s Sefer HaMitzvos.