As you do favors for the town folks, they offer you gifts as rewards. Randomly, a Physical evidence contact (Banker, shoemaker, barber or tailor) will offer to be your contact. Same goes for the Non Physical evidence contacts ( music teacher, bartender, fortune teller etc.). You can only have one contact of each catergory per city (for a max of 8 contacts).
Once a town folk becomes your contact, you can ask him and unlimited amount of questions and he / she will be happy to respond to your questions. Say if you do a case and you discover a shoe print at the scene. If you would have the shoemaker as a contact (and you discovered all the suspects in your case), you can ask him until he positively id's the footprint. If the person as no alibi or a fake one, then he / she is your murderer.
Hope this helps. Happy sleuthing