Ok, here's the deal:

Do you NEED to drill the hole? Maybe, maybe not.

Do you NEED to remove a small amount of covering around the slot? Maybe, maybe not.

The only way to tell for sure if you need to do these things is when you have enough experience with CA Hinges to know whether to do them or not.

Doing either of them will certainly not hurt anything, so when in doubt - Do it!

Read the article that RCKen posted above. It will show you exactly how they should be installed.