Entity reference - how to design the hierarchy?

I haven't been able to get this module to work, so this might be a dumb question, but:

How do I design the entity hierarchy that Hierarchical Select wil use?

The old Hierarchical Select Node Reference module allowed you to design a path: "A Hierarchical Select in widget setting allows you to define a path in the hierarchy of node reference fields, once defined, this path can be used to render Hierarchical Select form element in node add/edit form and views filter."

Does this module have something similar? Or does it do this automatically?