The instructions can be cryptic. My Grizzly DRO appears to be similar to yours. According to the manual, the error is measured in parts per million (PPM). In my case, using a 6" step, a 6.0012" reading would be a .0012" error which would be .0012"/6" x 1,000,000 or 2000PPM. Since the reading is higher than the actual value, I would enter-2000 for the correction factor.
After making the correction, exit and repeat the measurement. The DRO should now agree with the actual distance.
The manual advises using a known standard that is at least one "grade" better than the DRO resolution. For shorter distances, either a gage block or a step gage measured with a micrometer. Since you are actually measuring PPM, the longer the gage the better. A .0001" measurement error in a 1" standard would be 100PPM while in a 5", it would be 20PPM. Consider also that if you have 5 micron scales, the reading resolution is +/- .00016" which factors into your measurement.