Instructions
Deliver a male and female Pokemon that both belong to the same egg group to the daycare center. Select the option for breeding to create a baby Pokemon. Pokemon in the "no eggs" group cannot breed.
Take a Ditto and a Pokemon of any gender--again, it must be one that belongs to the same egg group as Ditto--to the daycare center to breed them. This procedure will create offspring according to the other Pokemon; you can't hatch a Ditto.
Walk around with the egg for a while until you get a notification indicating that the baby has hatched. You will need to perform this step regardless of which method you use. Your baby Pokemon will start out at level 5 and be at its most basic evolved form, no matter how evolved its parents are at the time. For example, breeding Pikachu or Raichu parents would get you a Pichu.