Mealy machine state transition
The order is not important.

You start with in input string. Let's say 00010000. Assume you already handled the first four digits of the input string getting you to state 00. Than the next input character is 0.

Being in state 00, there is an output arrow with 0 as 'input string'; which means WHEN you are in state 00 and the next to process character of the input string is a 0, than follow the arrow, and add the output to the output string. So to the output string the following will be appended: 0010,0

Now just continue parsing the entire input string, follow the arrows and concatenate all output strings together.