It’s quite easy! The oil goes into the diffuser where the water goes (this location varies on the diffuse) with the water. The oil can be mixed with other oil scents but know that unlike wax where you can see a new colour, you will get a new scent.
In the video the shade is on top of the location of where the water and the oil go. However keep in mind each company makes their diffusers differently so the location can change. It’s best to refer to any manual or written material that came with the diffuser for more information