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The Lens is exactly as the name says it is, a giant Lens (around Daxter's size). Crystal clear and easily capable of burning fur.
Jak had to use the Lens in No Man's Canyon (along with the other two, Gear and Shard), where he had to insert it into the Light Tower. It redirected the energy beam from the Shard which was then powerful enough to destroy Praxis' Statue
The Lens itself is located in the Mountain Temple, where they were sent to retrieve it for Samos and Onin. It was at the floor of a small temple, where a bright beam of sunlight shone on it. Daxter burned his tail when trying to remove it.