Setting up parent and child standards allows you to calculate standards-based grades differently than a flat, non-tiered set of standards (see the "Roll Up" setting here). Start by clicking on "Edit Objectives" on the Configure page. This page will display currently existing standards for whatever course you've chosen in the "Course" dropdown.
In the upper right, click the download objectives button () to download a .csv file of all the standards for your selected course. In the column titled "Parent Objective Code", enter in the code of a different standard to determine the parent/child relationship. Please note that in the same row, a code in the "Objective Code" column can never match the code in the "Parent Objective Code" column – i.e. a standard cannot be the parent of itself.
Once you have finished, save the file and drop the file back onto the page to see your new standards appear.