Items are used for many things
Red Cubes (A.K.A Trade Crystals) are used to get Exp on a machine in the city.
Obsidian Chips are used to hatch GeoGreymon Egg at the incubators.
Virus Chips are used to hatch Kimeramon Egg at the incubators.
Black Gears are used to hatch GeoGreymon Eggs, Cherubmon Eggs (25%), and Kimeramon Eggs.
Milk Shake and Hamburguers are used to restore life.
Ice Shards are used to buy Frigimon at the Ice Palace.
How to get
You can get Red Cubes (A.K.A Trade Crystals) from any bosses when u defeat them.
You can get Obsidian Chips from the 'Mines' by buying it with 35 cash.
You can get Virus Chips from CherubimonBoss or from KimeramonBoss by defeating them.
You can get Black Gears from defeating bosses except CherubimonBoss and PalmonBoss.
Milk Shake and Hamburgers are bought from one of the shops in the desert.
You can get Ice Shards by shooting the giant rectangular ice cube at the ice palace with fire moves and collect the small piece of ice that broke off.