If it is oversize you would add the 0.004 to the wear offset, if under you would subtract.
Reason I say add and subtract is because there may already be a value there so entering 0.004 would give you a false diameter. As an example you ask for 2 inch dia and you find it is 2.004. Now if the wear offset had previously been set to say 0.002 and you simply set it to 0.004 when you took the next cut you would be 0.002 oversize as you have not adjusted by the full amount it was oversize.
The easiest way to adjust the wear offsets, I think, is to type directly into the wear offset DRO.
I am not sure if you are aware but you can do simple arithmetic in DROs, for example if you take the above, your DRO has 0.002 in it and you are still 0.004 oversize, so you would click the DRO then enter +0.004 and when you press enter the DRO will have +0.006 in it.
You can not directly subtract however, but you can add a negative number, so if your wear offset DRO had 0.002 in it and your size was 0.004 under you would click the wear DRO and enter + - 0.004 and that would give you -0.002.
You can also divide and multiply into DROs although in this case that would not be suitable.
Hood