When setting up your VDOT O2 account profile the application will walk you through the the setup process. The key is determining your VDOT/current fitness. You can either enter a recent race result (most effective), estimate a result for a distance of your choice or enter your typical Easy pace (must be conversational) to determine your VDOT.
Once a VDOT score has been established the app will determine what paces are prescribed when creating workouts. This can be updated at anytime by clicking your VDOT (top right) or by entering a race result.