How do I reset my Macbook?

I have a Macbook that's running on Mac OS X version 10.6.8. I want to clear everything off the computer and I have the original CDs it came with. I also want to update my computer to the latest software so that I'm all up to date.. Help!!! I don't know how to reset the computer to factory settings and I don't which software(s) I will need to buy.