[Alneyan]

You must extract the file you have downloaded to [SE4 Directory]\Star Wars (or any other name). Then, you should see several directories, such as Data, Empires and so on. You need to extract the mod to its own directory, as otherwise it will overwrite the files of the standard game. Likewise, something such as [SE4 Directory]\Star Wars\Star Wars\Data will not work.

Then running the Modlauncher should display the Star wars mod (or the name you have given to this directory), and the game should use the files of the mod. By the looks of it, the mod can be played with the AI, but I cannot say how well the AI plays it.