VREF is a fixed voltage that defines the input range, eg. 0-3V or whatever.
That needs an external connection to a fixed voltage.
The digital value out represents what proportion of that voltage is measured on the ADC input.
You can use the ADC0820 with VREF - connected to 0V/GND and VREF + connected to +5V/VCC, to give a 0-5V input range.
(The 0804 has those connections internally).
Do not exceed the supply voltage range; you can go lower, eg. 2.5V, but not higher.
The LDR circuit should connect to V IN as with the 0804 version.