Theoretically, the <lj-embed> tag could be used for any kind of embedded media, but, in my experience, the most common use by far is video, so that's what I've used in the wordings. Music does strike me as another major use, though. One could say "embedded media" but then the users who come looking for info about "video" might miss it completely. Feel free to hash that debate out in comments.
Suggested wordings, blatantly copied and edited from the existing FAQs:
Change the heading to "How do I add images or videos to my entries, comments, or profile?"
Subheading: "How do I add video to my entries?"(OP note: This button appears on both the RTE and HTML editors)
Add embedded video to your entries by using the Embed Media button on the Post an Entry page.
Subheading: "Adding video using the <lj-embed> tag"
You can use <lj-embed> to add embedded media such as videos to your entries, profile, or comments, if the site hosting this media provides you with an embedding code. When using the Post an Entry page, you may need to click the HTML tab before you can use the examples given here. In all of the following examples, replace [embed code] with the embed code provided by the site hosting the media you wish to embed.
Change the heading to "How do I add videos and other media to my entries, comments or profile?"
Click on the "Embed Media" link (in the HTML editor) or the icon in the Rich Text editor, and enter the embed codes provided by those other sites. In comments, the Edit Profile page, or the HTML editor, you can also use the code <lj-embed>[embed code]</lj-embed>, replacing [embed code] with the embed code provided by the hosting site. Your media will not be embedded until the entry is posted, so it will not show up correctly when previewing the entry.