Using the Flute
Described in the game as "A glass flute that awakens sleeping Pokemon," the Blue Flute item does just that. If you're in a Pokemon battle and the opponent Pokemon puts yours to sleep, using the Blue Flute will instantly wake it up, allowing it to continue the battle. To use the Blue Flute during a battle, select "Bag" and choose the "Blue Flute" in your bag. Choose the sleeping Pokemon you'd like to wake up and let the Blue Flute work its magic.
Finding the Soot Sack
The Soot Sack is an item you need to unlock the Blue Flute. To find it, first head to Route 113, just outside of Fallarbor Town. You'll know you're getting close when you see the ground and plants covered in soot from the nearby volcano. Find the shop near the back of Route 113. Go inside the shop and talk to the owner. He'll give you the Soot Sack to collect the soot outside.
Getting the Blue Flute
With your new Soot Sack, head outside the Route 113 shop and walk through all of the soot-covered grass. Every step you take in the tall grass collects soot in the bag and turns the grass back to its normal green color. Getting the Blue Flute requires a soot count of 250, meaning you have to take at least 250 steps through soot-covered grass in the region. You can check how much soot you have by selecting the Soot Sack from your bag. Once you've got 250 pieces of soot, head back to the shop you originally got the Soot Sack in and talk to the man again. He'll reward your hard work with the Blue Flute.
Other Soot Items
Upon leaving the shop, you may notice that the grass you previously cleared of soot is once again covered in it; there are more items to unlock by collecting enough soot. After 500 steps through sooty grass, the shop owner gives you the Yellow Flute. This flute cures confused Pokemon in battle, much like the Blue Flute wakes sleeping Pokemon. 500 steps through soot unlocks the Red Flute, preventing your Pokemon from becoming attracted to Pokemon you're battling. Both the White and Black Flutes require 1,000 steps through sooty grass. The White Flute increases the number of wild Pokemon encounters you have in grass, while the Black Flute decreases them. With 6,000 steps through soot, you unlock the Pretty Chair. With 8,000 steps, you unlock the Pretty Desk. Both items are used in your Secret Base for decoration. Every time you go to the shop and collect an item, the soot counter resets. For example, if you just got the Yellow Flute, you can't get the Black Flute with 500 steps, it still takes 1,000.