The encoder axis in the MC4N will automatically set itself up.  With no EtherCAT axes it will be axis 0 and the ATYPE will show as either 44 (servo) or 76 (incremental encoder).  You can connect an encoder and it will count the pulses straight away.  MPOS will change as you move the encoder.

If you have EtherCAT axes, then the system will put the encoder at the end of your EtherCAT axes.  ie if 4 EtherCAT axes then Axes 0 to 3 will be EtherCAT and the encoder will be axis 4.  You can set it up to be absolute just by setting the ATYPE as appropriate.

Other than that, the usual axis commands will set it up.  UNITS to scale it, DEFPOS to set the position where you need it to be, OFFPOS to offset it.  You can link to it from another servo axis using the usual commands like CONNECT, MOVELINK etc.