How do i measure the output voltage of lm35 with digital voltmeter?
That's how the IC works: it outputs an analog voltage proportional to the temperature in °C. Output is 10 mV/°C, so at 20 °C you'll get 200 mV.

Connect one pin of your voltmeter (analog or digital, doesn't matter) to the output, and the other to the ground pin, because that's the reference against which you want to measure.