A psychic field is created by the unconscious or conscious manipulation of psychic energy.
Inside the Master's home universe, every being has their mind, on some level, tied to the psychic energies surrounding them. These energies can be manipulated by them or used to manipulate them.
Individuals whose control of their psychic field has shifted from the unconscious to the conscious are harder to manipulate and can in turn, manipulate the psychic fields of others. It is theorized that, if someone were able to remove all unconscious connection to their psychic field, they would be entirely impossible to manipulate. This however, is deemed impossible.
The most common use of the psychic field is to communicate information. It is possible to send memories and emotions and raw information. Almost anyone can learn to do this, given sufficient practice. It is easier to exchange information if both parties are cooperating, difficult to exchange if only one party is participating, and near impossible if one party is resisting.
It is also possible, though illegal on Gallifrey, for an individual with strong control of their own psychic field to exert control over individuals with weak control over their own psychic field. Time Lords, in general, naturally have enough control to be resistant to this, but some Time Lords who are not named have used this to dominate lesser species.