Destroy 2 allied units of the same border color, then Create and play a unit of the same color from your faction or neutrals.
Elf and Onion Soup offers you three random cards of the same border color to choose from, but it can contain any combination of faction or neutral cards; it is possible you will only be able to choose from a pool of all faction or all neutral cards.
This card applies only to UNITS, artifacts never count. If you activate without meeting the requirements, the card will simply destroy itself.
See this subject on The Witcher wiki: Elf and Onion Soup