Add an item
Just follow the same procedure you would to add an item to the Dock.  Simply drag the item from it's location to the lower pane.  As you do this you will see a blue horizontal bar appear indicating the location where you are placing it in the pane.  The key thing to understand is that if you want to place the item in the Sidebar you should place it as the last item.  If you don't you will highlight an existing shortcut and copy the item to that location, for example to the Pictures folder.

Remove an item
Just drag the item out of the Sidebar and it will disappear with a puff of smoke just as items removed from the Dock.  As is the case with removing icons from the Dock, you have only removed it from the Sidebar and have not deleted it.