This command is used to add a user to your buddylist. Upon acceptance you will also be added to their buddy list. If either of you or your buddy uses the DEL command, the buddy entry will be dropped for both parties.
Example:
/msg nickserv buddy add Phil
There are a few things that you should think about prior to adding a user to your buddy list. The first is that the user will now be able to tell when you're online and using your nickname. The second, is that the usr will now be able to see some information that has security implications such as your valid host address.