The thermostat goes outside the enclosure. Then your heat source is plugged into the thermostat. Then you set the desired temp.
The thermostat also has a probe that goes inside the enclosure. This measures the temps and tells the tstat to heat up/cool down accordingly.
I'm not exactly sure the best spot for the probe, I only keep snakes and wouldn't want to steer you in the wrong direction.
Then you'll want to use a IR temp gun to check and fine tune temps.
I don't want to give any beardie specific advice, but thats basically how the tstat works and is set up.