As the name suggests, scouts are used for extracting intelligence. The Scouts will arrive at the enemy city and will provide detailed analysis of the enemy city.
The level of intelligence is controlled by the level of the "Informatics" technology. Depending on your city's informatics level, the scouts will be able to transmit details like resources, troops, technology, buildings etc.
Important to note that the scout can be confused into providing incorrect information by the use of various stratagems.
If the enemy city's gates are open, your scouts will battle the enemy scouts first. If your are unable to kill a minimum of 10% of the enemy scouts, there will be no intelligence gathered at all. However, unless you win the scout battle, all your scouts will be able to transmit are scouts versus scouts battle statistics.
It is advisable to send a high attack hero with your scouts if you are anticipating high number of defending scouts in the enemy city. The attack hero will add to the combat power during the scouts versus scouts battle.
Scouts are also used as part of waves while sending rainbow attacks.
Rainbow attack with workers, warriors and scouts as suicidal troops for giving tactical advantage to attacking Archers.