Menelaus tells Telemachus about hiding in the horse with the bravest of the Argives and Odysseus. He tells how Helen came to see the horse and, suspecting a trap, called to the men inside, mimicking their wives. One man, Anticlus, was about to answer her. However, Odysseus put his hands over the mouth of Anticlus and forced him to keep quiet until Helen had gone.
In Book 4 of the Odyssey, Telemachus is in Sparta. He is visiting Menelaus, the king of Sparta, in order to find out more information about his father Odysseus, who has been missing ever since the Trojan War started twenty years earlier.
They entertain Telemachus and tell him stories about the homecomings of different Greek heroes. They also tell him that Odysseus is most likely imprisoned on the isle of Calypso. The wooden horse comes up when Menelaus begins talking about the Trojan War itself, and the method by which the Greeks won the war.
The winning strategy was crafted by Odysseus himself. He is often thought to be the cleverest man on the Greek expedition. His idea was to build a giant wooden horse, hide an elite force of soldiers inside, and trick the Trojans into bringing the horse inside the city walls itself. The Greeks knew that they had to penetrate the city walls of Troy in order to even have a chance of winning the war. They built the horse (a symbol of Troy) in three days.
Then they hid, leaving the horse on the beach with one Greek solider, Sinon. Sinon lies to the Trojans who come to investigate, telling them that the Greeks have all given up and sailed home. The horse is a gift for Athena, as retribution for destroying her Trojan temple. Sinon also says that they built it as large as they could so the Trojans wouldn't be able to bring it into their city. The Trojans, of course, see this as a challenge. They wheel the horse inside of the city. There are several warnings that the horse is a trick, but the Trojans ignore them all. Even Helen of Troy suspects that there are Greek soldiers inside of the horse. She imitates the voices of several of the Greek soldiers' wives. One Greek almost responds, but Odysseus claps his hand over the man's mouth. That night, the Greek soliders leave the horse and sack the entire city.