On the Friends page, tap Challenge next to a friend who is online. They get a notice and can accept or decline. If they don't answer within a minute, the challenge ends.
The match is played like a Gameroom match, but it's just for fun: no coins are at stake, and it gives no chest, leaderboard or Dice Road points. It does count toward your duels played and won, and toward the daily task "Play a match with a friend".
A friend who is already in a match shows In a match and can be challenged once they're done.