You can buy lures in the shop on your island. To use a Fish Bait, select the bait next to your inventory, and before casting the line, throw it anywhere in the water. This will cause a fish to appear on the surface, allowing you to fish there.
Please keep in mind that the effectiveness of the bait depends on where you use it. Different fish inhabit different parts of the fishing area, living in shoals. Therefore, where you use your bait can affect what type of fish you might attract.
Ultimately, Fish Bait is not an essential item when it comes to catching fish – but it saves you time to search for shoals of fish and waiting time for the fish to show up.