The second is while looking at a user's profile click the "add [user] as a contact" link.
For either way the next step will prompt you to select "family" or "friends" you can click one, both or neither of these boxes.
This allows you some privacy and control over who views your pictures. When you're uploading pictures you can choose who can view then - everyone, only you, friends or family.
You an also limit who can comment, print and blog your photos based on the contact setting.