The leg yield is the first lateral movement taught to young horses or novice riders. In fact, it is so essential that it should be taught very early in a rider's career.
Early Stages
At the beginning, all we want is for the horse to step away from the rider's leg. It may be from the halt, or at the walk, or in the trot. It may happen on a circle or on a straight line. Essentially, if the rider applies some leg pressure, the horse should step away from the pressure.
This aid plays an important role in helping the horse learn to balance around turns. Horses commonly lean into a turn or circle, "falling" to the inside as they come around. The rider can use the leg aid to keep the rib cage "up" through the turn, which also encourages a deeper inside hind leg stride, which then results in a much better balanced turn. It also allows the rider to keep her own balance through turns and circles.
*Click on the diagrams to enlarge.
A) Leg Yield Facing The Rail
You can position your horse so that he is diagonally facing the rail. Then leg yield down the rail, keeping that position. This exercise may be helpful to teach your horse that the sideways movement is expected, because the rail itself will encourage your horse's sideways movement.
B) Leg Yield On a Line, From A Quarter Line to the Rail
Start on the rail, going right. As you pass A, come off the rail and head down the long 
side of the arena parallel to the rail - but off the rail - in a straight line. Use your inside leg to ask the horse to step away from your right leg (leg yield left), to the outside, until he is back on the rail.
The key to this leg yield is to keep your horse's body as straight as possible while the horse steps forward and sideways. The horse's head can be straight or flexed slightly to the right. You can increase the difficulty level by starting at the center line and heading to the rail, requiring more sideways movement.
C) Leg Yield On a Line, From The Rail to the Quarter Line
This leg yield is more difficult than the first. You start on the rail (on the long side of the arena) and step off it toward the first quarter line. You can continue to the center line to make it even more difficult. The horse's body should be straight and flexion can be straight or slightly to the outside.
D) Leg Yield On A Circle
The leg yield on a circle (or turn) can be the initial step toward achieving a head-to-tail bend. You can use it to expand the size of a circle, asking the horse to step sideways-out - which will encourage the inside hind leg to stride deeper underneath the body. This increased engagement of the inside hind leg will help maintain balance through the turn, and develop carrying power.
In all of the leg yield variations, you are trying to establish a forward-sideways movement. A leg yield can't be only forward, nor only sideways. It should have equal components of forward and sideways (hard to do). Both front and hind legs should cross over as the horse maintains a straight body. If you lose the forward inclination, stop asking for sideways and re-establish forward. Try for sideways when you have a fairly free and energetic gait on the straight line.
