You create an newsletter just like you would any other page in your site. First Click on "Create content - Newsletter issue"
Give your Newsletter issue a title that is short and interesting
Next, select the newsletter this issue belongs too in the drop-down menu. Note that it's possible to manage several different newsletters which is why there is a selection box.
Add your newsletter content into the text area. Start with simple headings, paragraphs and images. Simplenews comes with some variables that can be used for different types of repetitive and dynamic content, such as today's date, subscribe/unsubscribe links, and others.
Try sending the newsletter to your test email. The test email address is configured in "Content management - Newsletter"