The spyglass is a tool that you can access by pressing "3".
How it works
Immediately when you press "3", you will see farther. You can change the zoom level with your scroll wheel.
3rd person to 1st person
Note that when you use it, you will see through the eyes of your seadog, which means that you're seeing it from a lower angle. You might often find parts of your ship in the way and blocking your vision which is why you should try to lean over railings in your ship to see over them.
The spyglass can be used to scout ahead and find enemies or weaker ships to attack.