To zoom in, drag a rectangle from upper left to lower right. Note that this is the only way to zoom in when using the mouse. If you drag a rectangle in any other direction zoom out is performed.
Zooming can also be done very efficiently from the Plot Toolbar.
It can also be done from the menu Plot->Axis Range.
Note that in certain cases, if the plot is to be zoomed out, the mouse out-zooming will not zoom out completely, but zoom out to the previous setting. If you want to zoom out completely, click on the button shown above.
Note: If the mouse zooming is deactivated, see the section above to activate it.