When in a pinch, items can save the day. Items can be used instantly, and using items does not affect the Active Time Battle gauge in any way. Some items are used on all party members, and some can be used only on one.
Choosing the "Item" command will bring up a list of available battle items. Choose the one you need at the moment and then select who you want to use it on. The AI can assist you by automatically putting the cursor on the one that needs it the most. Items are great for healing in the early stages of the game, before you obtain any decent heal magic.