Horn Flutes are consumable items that can be targeted to put any enemies in its range to "sleep" for 10 days. It's area-of-effect is a 3-hex-wide circle, and can be targeted up to 6 tiles away from the group.
Flutes effect any/all enemies in its range, even if they are aggroed.
These are also relevant in the Find an Instrument quest, in which each horn flute presented back in London will grant the player 25 Funds.
Flutes are relatively common and can appear for trade from a village, shaman's hut or slaver camp. It can also be looted from a stone statue or angry natives.