Install:

Earlier game versions ( before 1.4 )
Just unpack using 7-zip and place "data" folder in My Documents/Dying Light/

Game versions 1.4 and higher (including " The Following"):

Place data3.pak in Dying Light's root directory DW folder, overwite if necessary.

If using other mods, it needs to be added to the data3.pak by using the mod Simple Pakker by lyravega found here (or repacked using WinRAR):

http://www.nexusmods.com/dyinglight/mods/82/?

Simple Pakker is an easy program that allows you to repack mods into a .pak format. Very easy to use and allows all the mods here on the Dying Light Nexus to function in-game. Just follow his instructions and remember to endorse :)