Apple's support article includes a detailed list of instructions on the process:
Users that have a third-generation Apple TV running the 6.0 software can use an iPhone, iPad, or iPod touch running iOS 7 to automatically transfer network settings, Apple ID information, and language preferences to the Apple TV, allowing for faster setup. The information exchange is done via Bluetooth by touching the iOS device to the Apple TV, taking advantage of the Bluetooth LE built into all Apple devices after the iPhone 4.
1. Connect your Apple TV to your television and power and wait until your Apple TV displays the setup screen.Prior to the implementation of the tap setup feature, entering Apple TV information was a tedious process that required connecting a Bluetooth keyboard or using the Apple TV remote to pick and choose letters.
2. Unlock your iOS 7 device and ensure that Bluetooth is enabled. Also ensure that you are connected to the Wi-Fi network you want to use with Apple TV.
3. Touch your iOS device to your Apple TV and wait for the prompts to appear on your iOS device and Apple TV.
4. Enter your Apple ID and password on your iOS device.
5. Choose if you want Apple TV to remember your Apple ID password, and if you want Apple TV to send data to Apple.
6. Your Apple TV will start the configuration process, including connecting to your Wi-Fi network, activating Apple TV, and setting up your iTunes Store account.
As noted by Apple, the transfer requires an iPhone 4s or later, a third-generation iPad or later, an iPad mini, or a fifth-generation iPod touch. The feature does not work with the iPhone 4 or the iPad 2.
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