this has been talked about on the CAI threads all the time
Okay, as you face the engine:
port on the right edge of the valve cover = fresh air
inlet port on the back edge of the valve cover, w/ a hose to your manifold = funky oily air
outlet, incudes the PCV valve which you should be replacing at regular intervals.
Cuts is right, with the gases ported to the manifold it does let all kinds of nastiness build up in there, but the manifold vacuum helps pull the gases out.
Unless of course you are running boost
As for the air
inlet, slap an air breather filter on there.
It looks cool, cuts down on hoses, and it'll pass any emissions check.