Addon domain means you can host more than one domain in the same hosting account. The number of domains you can addon depends on the hosting package you have got.
1. Go to http://yoursitename.com/cpanel and in the left side bar note down the dedicated ip.
2. go to your addon domain name's domain manager control panel ( you have this panel at where you bought the domain name. for example, http://godaddy.com )
Create a A name record (please refer your domain registrar help pages for this. instructions differ per company) and add the dedicated ip you noted in step 1. after you do this, wait for few hours for this to take effect.
3. then go to
http://yoursitename.com/cpanel
and look for the Addon domain icon. click that and it will be self-explanatory to follow the steps.