You connect it to the plc block via the cable, the addressing follows on from the last octal address of the plc I/O
i.e. if the plc is a 32 I/O block then this will have Inputs X0-7 X10-17 Y0-7 & Y10-17 so if the 8 way block is the first one connected to the plc block this becomes X20-27 ( if output then Y20-27).
you don't need any logic to communicate with digital I/O cards but for analog or special function cards you use the TO & From instructions
The address of the special cards start at 0 for the first extension block.