How to connect Aref (Avcc and Agnd) and where to place the bypass capacitor?
To answer your specific question, you want the decoupling capacitor between AREF and AGND.

The underlying idea is that you separate the analog power/ground from the digital power/ground, so digital transients and interference don't show up in the ADC. As the datasheet says, you connect the analog ground and digital ground together only at the power supply.

Theoretically grounds are all the same, but in practice, the wires/traces have some impedance so different parts of the ground trace won't have exactly the same voltage. By using separate wires for the analog and digital ground (a star ground), the decoupling capacitors will filter out most of the digital transients before they can get to the analog side.

This article (Staying Well Grounded, H. Zumbahle, Analog Dialogue Jun 2012, V46) provides more detail.