Monster nests are labelled on the map with the monster's face symbol. They require you to plant a bomb (Samum, Grapeshot or Dancing Star) inside the nest to destroy it. Monster nests are fairly common and you should unlock this naturally through playing story mode and doing side quests. If you want to get this quickly there are six nests close to one another in the east part of Velen, with four inbetween Reardon Manor and Benek and two more just north east of Benek.