The first step is to tag your music as sad or happy; calm or intense (fortunately, you can tag many tracks at once). As you do, the Moody track information is stored in the "Composer" field.
Once that's done, you can keep the tiny Moody window open and click the color-coded button that represents your current mood. Other goodies include Twitter integration, support for uploading and downloading tags and the color editor for customizing those buttons.
It's a great idea; I often listen to music by "mood." Moody is donation ware ($9US is suggested) and requires Mac OS 10.4 or better.