Jon Lester wears a lot of grease in his hair because he is what society would call a pretty boy. Whether he intentionally or unintentionally greased the ball is up for debate, but it was definitely greased. Every time he touches his hair his fingers are soaked with grease. This is how he greased the ball.
He had the substance on him because of the amount that he sweats. The Boston Red Sox told the Cardinals about it and the Cardinals had no comment on it and seemed to be fine with it. Plus Lester only used the substance on his hand and did not use it on the ball.