http://www.furiouspaul.com/overwatch/mccree.html
Basically for each second of charge it will gain 100hp of damage to each eligible (visible) target.
Once it reaches sufficient damage on a target for a killshot it will turn into a skull.
Half the charge is used for the surveying, half it used on the second press to offload it.
You press the key a second time.
The first press is surveying your targets, effectively lining up your shots.
The longer you can do that, the stronger they will be when you fire.