UPS_CD_SEL# from the point of view of the downstream sidecar means that the sidecar upstream has decoded the current address. if this signal is active and your own address decoder is also active, that means that both expansions are trying to decode the same address, which is a conflict! one of the PALs detects this and asserts BERR# (bus error).
here's how the address gets decoded. the register on the left is normally disabled, so the pullup and pulldown resistor arrays set up the address comparator to "E8" which is the autoconfig space. during configuration, the card gets assigned a new address which gets latched in the register and overrides the default address. simple and elegant.