I've only glanced at the datasheet, but if its similar to the other I2C temp sensors I've messed with...
ADD1 and ADD0 set the I2C bus address of the device by driving none, one, or both high (or low). This means that you can have up to 4 of these temp sensors on the same I2C bus. Tie directly to ground/vcc through a resistor, or use jumper blocks for the ultimate in flexibility.
Not sure what ALERT does. Perhaps you can set threshold values on the temp sensor and the ALERT pin will go high when the higher threshold is surpassed and low when the lower threshold is surpassed. This creates a simple thermostat type functionality where you could turn on/off a heater based on this chip.
This is probably all in the datasheet...
Good luck!