It's recommended to only use lump in an egg, less ash and less nasties creeping into the ceramic.
You can bury a couple chunks in the coals if you want, it really doesn't matter. I prefer to throw them on top. I throw 2 lighter cubes on top, when they are burnt out I place a chunk on each lit spot. 30 minutes later or so once you get thin blue smoke your good to go.
You will find many folks who bury the chunks though.
"I can get a good look at a T-bone by sticking my head up a bull's a$$, but I'd rather take a butcher's word for it". - Tommy Callahan III
XL Big Green Egg, 22.5 Weber OTS, WSJ Gold/Mini WSM, 18" & 22" WSM, UDS "No.8"
Flyers Orange Thermapen
Napkin Killers BBQ