I have not tested the plugin with Widget Logic, but there should not be any issues. Content Aware Sidebars does not manipulate with widgets, while Widget Logic does not manipulate with sidebars (I think).
The "Replace" handle means that the "Host sidebar" will be replaced by the new sidebar with the content you have specified, whereas "Merge" means that it will merge with the Host Sidebar instead, showing widgets from both the new sidebar and the "Host sidebar".
Unfortunately there are no detailed documentation yet, but I gladly answer any questions you might have. I've seen some review articles about the plugin though.