Decorations help you improve the general aspect of your city and to increase the bonus for your buildings. Each Building has a fixed radius surrounding it. If you place a decoration inside that radius the bonus you receive for that building will increase. Each decoration has a star value assigned to it. This shows how much impact that decoration has on the building and on its reward multiplier. However, please note that placing multiple decorations of the same type inside a building's radius will only decrease that bonus.

To view the Decoration Bonus, select a building on the game screen and click/tap on the building's image above the task list: